S&P Tops 5,200 as Fed Backs Rate-Cut View

What You Need to Know

The Fed move suggests the bank isn’t alarmed by a recent inflation uptick.

Wall Street traders sent stocks to fresh all-time highs as the Federal Reserve signaled it’s on track to cut interest rates for the first time since the onset of the pandemic.

In a historic move, the S&P 500 topped 5,200 on speculation that the end of the most aggressive Fed hiking cycle in a generation will keep fueling corporate America’s profits. Gains in equities were almost broad-based, with areas that have been lagging this year — like small caps — rallying. Short-term Treasurys outperformed, with traders now seeing higher odds of a first rate cut in June.

Fed officials maintained their outlook for three cuts this year and moved toward slowing the pace of reducing their bond holdings, suggesting they aren’t alarmed by a recent uptick in inflation. While Jerome Powell continued to highlight officials would like to see more evidence that prices are coming down, he also said it will be appropriate to start easing “at some point this year.”

“The sum total of this ‘no news is good news’ press conference is that markets continue to have a green light to run higher,” said Chris Zaccarelli at Independent Advisor Alliance. “This Fed isn’t going to stand in the way of the bull market.”