Dow Jones Industrial Average achieved an unprecedented milestone, closing above the 38,000 mark for the first time in history on Monday (Jan 22). Accompanying this surge, the S&P 500 also notched a new record, closing at approximately 4,850, while the Nasdaq saw an uptick, reaching 15,360 at the close of Monday’s trading session.
The early days of the year witnessed a sluggish performance across major stock indexes. However, a notable reversal occurred in the middle of last week, propelling the market to its current heights.
Investors have been buoyed by the anticipation of inflation reverting to normal levels without succumbing to a recession. Adding to the momentum, investor enthusiasm for artificial intelligence (AI) has played a significant role in driving returns in the market.
Moreover, the recovery may also be attributed, in part, to expectations among certain investors of potential interest rate cuts by the Federal Reserve as early as March.
Federal Reserve Governor Christopher Waller indicated early last week that the central bank anticipates rate cuts in the coming year but also called for a cautious approach, stating that decisions won’t be made in a hurry.
Waller’s comments initially caused treasury yields to surge and major stock indexes to decline.
Since then, however, the stock market has shown resilience and climbed steadily.
If implemented, these cuts could reduce borrowing costs for both consumers and businesses, potentially stimulating economic activity through increased household spending and corporate investment.
This is because a swift interest rate cut could risk triggering a rebound in inflation. The concern is that heightened consumer demand might lead to an acceleration of price increases.
(With inputs from agencies)
Source: Thanks WIONews.com