US Stocks Rise as Fed Cuts Interest Rates; Dollar Weakens

US Stocks Rise as Fed Cuts Interest Rates; Dollar Weakens

US stock markets rallied on Wednesday after the Federal Reserve announced its first interest rate cut in over four years, leading to gains across major indices. The Fed’s Federal Open Market Committee (FOMC) lowered its benchmark interest rate by 50 basis points, bringing it to a range of 4.75% to 5%, marking the first such reduction since 2019.

Following the Fed's announcement, the Dow Jones Industrial Average climbed 103.40 points, or 0.25%, to 41,709.58. The S&P 500 gained 22.31 points, or 0.40%, to 5,656.89, while the Nasdaq Composite rose 132.71 points, or 0.75%, to 17,760.77.

Earlier in the session, ahead of the Fed’s decision, the Dow Jones had dipped slightly by 40.18 points to 41,560.69, while the S&P 500 and Nasdaq both posted modest gains of 0.06% and 0.13%, respectively.

At the opening bell, the Dow Jones was up 22.7 points, or 0.05%, to 41,628.91, the S&P 500 rose by 7.1 points, or 0.13%, to 5,641.68, and the Nasdaq added 35.3 points, or 0.20%, to 17,663.38.

In the currency market, the U.S. dollar weakened following the rate cut, with the dollar index dropping 0.46% to 100.45 by midnight (India Time), marking its lowest level since July 2023. Treasury yields saw an uptick, with the 10-year yield rising to 3.67% and the 2-year yield increasing to 3.62%.

Among individual stocks, Intuitive Machines surged by 57% after securing a $4.82 billion contract from NASA for communication and navigation services. Tech giants Apple and Alphabet saw gains of 1% and 0.41%, respectively, while Microsoft slipped by 0.57%.

The combination of a rate cut, a weaker dollar, and rising Treasury yields highlights ongoing shifts in investor sentiment as markets digest the Federal Reserve's actions aimed at bolstering economic growth.