Dow Surges on Hints of Rate Hike from the Fed

The US stock market gained decent ground, late this week, mostly on signs that the Federal Reserve will, in fact, issue an interest rate cut.  Much of this translated through the market as the Standard & Poor’s 500 Index setting an all-time high setting the stage for its best June since 1955.

Indeed, the S&P 500 beat its own record early in the day, only to climb even further to close at 2,954.18 on Thursday.  And on that note, the Dow Jones Industrial Average also saw a surge, climbing an impressive 250 points, putting it within just a single percent of setting its own record. 

Specifically, the S&P 500 jumped nearly 28 points—a little less than 1 percent—to 2954.18; the Nasdaq Composite Index added more than 64 points—about 0.80 percent—to close the day just north of 8051; the Dow Jones Industrial Average increased more than 249 points—also a little less than 1 percent—to close at 26753.17. 

The rocket boom could not have come at a more important time, as US markets are coming out of the worst May since 2010, with investors struggling to make sense of the risks introduced as a result of President Trump’s unnecessarily complicated trade conflicts.  

Now, it should be noted the Fed has closed the week without signaling a definite rate cut. However, the central bank has hinted at a willingness to, at the very least, consider doing so, mainly as a means to prop up the economy in the event any slowdowns will come out of this trade war. Indeed, approximately half of the Fed leaders have called for rate cuts to go into effect before the end of the year. This is quite the dramatic shift from March, when there was no such discussion at all.

All this in mind, though, it should also be noted that the S&P 500 in particularly, has opened sessions up more than 1 percent to set record highs on ten separate occasions in just the last ten-or-so years. And in about half of these situations, the week following the unprecedented runs have declined, average down 0.6 percent after the second week.