Dow Jones rises 500 points after the US Fed cuts interest rates by 25 basis points

The Dow Jones rose more than 500 points on Wednesday after the Federal Reserve cut interest rates by a quarter of a percentage point and indicated it is likely to halt further cuts in borrowing costs in line with expectations. The cut was the result of a divided vote, with the central bank saying it would look ahead for clearer signals on the direction of the labor market and inflation “remaining somewhat elevated”.

However, projections after the Fed’s two-day meeting showed that median expectations for another quarter-percentage-point cut in 2026 were in line with September expectations. And policymakers raised their expectations for GDP growth in 2026 to 2.3% from 1.8% in September and kept their unemployment estimate at 4.4% at the end of next year.The projections and lack of an overly aggressive tone in the statement seemed to attract investors to the stock market.

“If the Fed cuts rates and the economy is not heading into an imminent downturn or recession, markets tend to be happy with that backdrop,” said Mona Mahajan, head of investment strategy at Edward Jones in New York.

At 3:17 p.m., the Dow Jones rose 583.94 points (1.23%) to 48,144.23, the S&P 500 rose 53.39 points (0.78%) to 6,893.91 and the Nasdaq added 118.27 points (0.50%) to 23,694.75.

Fed Chairman Jerome Powell said at a news conference that the FOMC is well positioned to wait and respond to the developing economy, in what could be seen as a pause in rate cuts in upcoming meetings. After the statement, traders factored in a 78% chance that the Fed would keep rates steady in January, according to the latest data from LSEG.

Of the eleven major industrial sectors of the S&P 500, most advanced. Technology and communications services were the biggest losers. The industrial sector was the biggest winner. In individual stocks, energy equipment maker GE Vernova rose more than 15% after predicting higher sales in 2026, indicating strong demand for its AI-related infrastructure.

On the NYSE, there were 214 new highs and 40 new lows. On the Nasdaq, 2,851 stocks rose and 1,788 fell as advancing issues outnumbered declining stocks by a 1.59-to-1 ratio.

The S&P 500 posted 32 new 52-week highs and 6 new lows, while the Nasdaq Composite posted 126 new highs and 69 new lows.