Records on Wall Street After Fed Rate Cuts, European Stock Prices Fall on Friday Morning

On Wall Street, the S&P 500 and Dow Jones indices surged to record levels on Thursday as investors were encouraged by the aggressive rate cut from the U.S. central bank and expectations of further reductions in the cost of money.

The Dow Jones rose by 1.26 percent to 42,025 points, while the S&P 500 jumped 1.70 percent to 5,713 points, and the Nasdaq index increased by 2.51 percent to 18,013 points.

The new records for the S&P and Dow Jones are attributed to the Fed’s rate cut of 0.5 percentage points during Wednesday’s meeting.

Additionally, Fed officials estimate that they will reduce rates by another 0.5 percentage points by the end of the year, and by a full percentage point next year.

Fed Chairman Jerome Powell stated that the economic situation is good, that it is growing, while inflation is declining.

All of this has created euphoria in the market, leading to new record levels for stock indices yesterday, accompanied by increased trading volume.

In eight of the 11 major sectors, stock prices rose, with the technology sector seeing the largest increase of over 3 percent.

– The Fed painted a pretty good economic picture, so we can now see that money is returning to the market, particularly in some sectors that have previously experienced slower growth – says James Ragan, director at Wealth Management Research.

Consequently, stock prices of smaller companies significantly increased yesterday, as lower interest rates could lead to reduced costs and increased demand for their products and services.

Among the winners were also the shares of regional banks, which can expect increased demand for loans alongside lower interest rates.

European stock prices also rose yesterday. The London FTSE index strengthened by 0.91 percent to 8,328 points, while the Frankfurt DAX jumped 1.55 percent to 19,002 points, and the Paris CAC increased by 2.29 percent to 7,615 points.

European Markets Lost Some of Yesterday’s Gains

On European markets, stock prices fell on Friday morning, mainly due to a correction following yesterday’s strong growth.

The STOXX 600 index of leading European stocks was down 0.4 percent at 9:30 AM, but it is still on track for gains for the second consecutive week.

This morning, the London FTSE index weakened by 0.53 percent to 8,285 points, while the Frankfurt DAX slid by 0.68 percent to 18,875 points, and the Paris CAC fell by 0.29 percent to 7,595 points.

The largest declines were seen in the technology sector, with an average drop of 0.9 percent.

Asian Markets Rose Further

On Asian markets, stock prices rose again on Friday, marking the second consecutive day of gains, as investors were encouraged by the rate cuts in the U.S., while the value of the dollar against a basket of currencies fell near its lowest level in a year.

The MSCI index of Asia-Pacific stocks, excluding Japan, was up 0.7 percent at 7:00 AM, reaching its highest level in two months.

On the Tokyo Stock Exchange, the Nikkei index surged nearly 2 percent, while stock prices in Australia, South Korea, and Hong Kong rose between 0.4 and 1.4 percent. In Shanghai, however, prices slightly declined.

The strong growth of the Nikkei index is attributed to the decision of the Japanese central bank to maintain interest rates at their current level, which positively surprised some investors who expected further increases in the cost of money.

The recent jump in stock prices on Wall Street also positively influenced Asian markets. The Dow Jones rose by 1.26 percent, while the S&P 500 jumped by 1.70 percent, and the Nasdaq index increased by 2.51 percent.