by Caroline Valetkevitch

NEW YORK (Reuters) – The New York Stock Exchange ended sharply higher on Wednesday, with the Dow Jones reaching a record high in almost two years, after the US Federal Reserve (Fed) left its benchmark rate at its current level and reported that its cycle of monetary tightening was coming to an end, with a likely drop in credit costs next year.

The Dow Jones index gained 1.40%, or 512.30 points, to 37,090.24 points.

The broader S&P-500 gained 63.39 points, or 1.37%, to 4,707.09 points.

The Nasdaq Composite advanced 200.57 points (1.38%) to 14,733.96 points.

In its monetary policy decision at the end of its two-day meeting, the Fed again kept interest rates unchanged, as expected, and indicated that almost all of its officials anticipated a decline in interest rates. rate by the end of 2024.

While they were stable before the end of the Fed meeting, the main Wall Street indices turned green following the press release from the American central bank. The Dow Jones has climbed to a closing high since January 2022, while the S&P-500 and Nasdaq have set a record this year.

The trend accelerated with the press conference of the president of the institution, Jerome Powell, who declared that it was “unlikely” that the Fed would raise its rates again and that the central bank was very vigilant to avoid ” the mistake of keeping rates too high for too long.”

With its monetary policy statement, the Fed shows that it “sees that the markets have already started to bet on the fact that inflation would return to normal without causing a recession”, commented Tom Martin, portfolio manager at Globalt Investments, Atlanta.

“We were hoping it would be that way, but we didn’t really think so,” he said. According to Fedwatch data, the probability of an interest rate cut next May increased to 90%, compared to 80%, with the Fed’s announcement.

Wall Street has recorded gains in recent weeks amid optimism about the end of the monetary tightening cycle started by the Fed in March 2022 to control inflation.

A report from the US Department of Labor published today shows that producer prices in the United States increased in November by 0.9% at an annual rate.

All major sectors of the S&P-500 posted gains, led by interest-rate-sensitive real estate and utilities, which both rose more than 3%. On the value side, going against the trend of the day, Pfizer fell 6.7% after communicating forecasts for 2024 lower than Wall Street expectations.

( Jean Terzian)

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