Wall Street markets rebounded higher on Wednesday afternoon after the Federal Reserve announced a rate cut. This rate cut assuaged some investors’ fears about a slowing economy and The Dow Jones industrial average was able to gain more than 130 points as a result.
Initially, stocks zigzagged throughout the day because some investors did not have confidence that the Fed would lower rates again. However, investors eventually appeared relieved that the Feds commented on inflation, showing that the Fed was able to focus less on the consumer credit crisis then it has during previous months.
Wall Street also appreciated the fact that consumers, investors, and business will be able to access cash cheaper then before. All in all, the fed funds rate now stands at 4.50 percent, a significant change from previous months.
Furthermore, the Fed found room to offer a less accommodative statement than some had expected. “A rather stingy Fed suggests that they see an economy that is in pretty good shape,” said Bruce McCain, head of the investment strategy team for Key Private Bank. They’re saying now we can turn back to the issue of inflation and implicit in that is that the economy is getting back on track.”
The Dow, which had dipped briefly into negative territory after the decision, rose 137.54, or 1 percent, to 13,930.01. The Standard & Poor’s 500 index rose 18.36, or 1.20 percent, to 1,549.38, and the Nasdaq composite index rose 42.41, or 1.51 percent, to 2,859.12.
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