Key Takeaways:
- On Thursday, stock markets experienced a rally, with both the Dow Jones Industrial Average and the S&P 500 reaching new record highs.
- The Federal Reserve opted to keep interest rates unchanged and indicated the possibility of three rate cuts in 2024.
- Reddit made a significant debut on the stock market, closing 48% higher on its first day of trading.
US stocks surged on Thursday to fresh records, continuing the momentum in the wake of the Federal Reserve’s latest monetary policy update.
The S&P 500 and the Dow Jones Industrial Average surged to fresh record highs, with the Dow experiencing a notable spike of 269 points. These gains came in the aftermath of Jerome Powell’s press conference on Wednesday, during which he reaffirmed the Federal Reserve’s commitment to its 2% inflation target. Powell also emphasized that policymakers would closely monitor incoming data before making any further moves. Additionally, the dot plot of interest rate projections for the coming years indicated that officials still anticipate three rate cuts in 2024.
Traders reacted swiftly to the Fed’s statements, as reflected in the CME’s FedWatch Tool, which showed a significant increase in bets for a June rate cut over the past 24 hours. The odds for easing to begin in June surged from 55% to nearly 70%. This shift in market sentiment suggests growing anticipation for a return to a more normal monetary policy environment, aimed at sustaining growth and managing inflationary pressures, according to Liz Young, the head of investment strategy at SoFi.
Meanwhile, Reddit made its highly anticipated public trading debut on Thursday, witnessing a remarkable rally of up to 70% before eventually closing 47% higher at $50.31 per share. Despite the enthusiasm surrounding the IPO, some Redditors on the platform expressed disinterest in participating, particularly since the offering was limited to select top users.
However, the day also saw Apple shares tumble by 4% following the announcement of a lawsuit by the US Department of Justice alleging anticompetitive practices in the smartphone market. As a result, the stock closed at $171.37, marking an 11% decline year-to-date.