Current:Home > BackWhy your 401(k) is happy: Dow Jones reaches new record after Fed forecasts lower rates-InfoLens
Why your 401(k) is happy: Dow Jones reaches new record after Fed forecasts lower rates
View Date:2024-12-23 10:34:17
Good news for your 401(k): stocks are surging and the Dow Jones Industrial Average closed at a record high Wednesday after the Federal Reserve said interest rates may go down in 2024.
The Dow closed at 37,090.24, up 1.4% from the previous day. The S&P 500 and Nasdaq composite also climbed 1.4%, with the S&P 500 benchmark nearing its own record high.
The stock market's rally came after the Fed signaled it's probably done hiking rates and is forecasting three cuts next year.
Wall Street loves lower interest rates because they can relax the pressure on the economy and goose prices for all kinds of investments, from stocks to bonds to cryptocurrencies. Markets have been rallying since October on rising hopes that cuts may be on the way.
“Seasonal optimism sort of ignited the advance in all equity markets,” said Sam Stovall, chief investment strategist at investment research and analytics firm CFRA Research. “And with the Dow being closest to its all-time high, today's Fed notes and press conference – which I believe ended up being more dovish than the market had been anticipating – actually offered a confirmation that investors were on the right track.”
What is the record high for the Dow Jones?
The Dow Jones’ close on Wednesday topped its previous record of 36,799.65 from January 2022.
What does this mean for me and my 401(k)?
The rally offers a boost to investors' retirement plans. It’s also a good signal for the overall economy’s health, according to Ryan Detrick, chief market strategist at financial services firm Carson Group.
“It's important for investors to remember stocks tend to lead the economy. That's on the way up and the way down,” he said. “But right now, with new highs taking place? It could be the market’s way of saying, ‘Hey, there’s no recession next year, and the economy could be a little bit better than what most people are anticipating right now.'”
What’s next for the stock market?
Signs point to this bull market continuing in the near term.
“The end of the year is like a tractor beam, to use a Star Trek analogy," Stovall said. "It’s basically pulling the indexes higher, because the portfolio managers are putting the pedal to the metal, realizing that they want to at least come as close to the benchmark if not exceed it, before year-end.”
Federal Reserve updates:Fed holds rates steady as inflation eases, forecasts 3 cuts in 2024
Detrick also expects more gains heading into the new year.
“The economy is on firm footing,” he said. “This Fed is done with their aggressive hiking. We could have record earnings next year," for companies. "All of these things suggest that this bull market ... could have legs well into 2024.”
Contributing: The Associated Press
veryGood! (9)
Related
- Five best fits for Alex Bregman: Will Astros homegrown star leave as free agent?
- Billionaire Sudha Reddy Stuns at Met Gala 2024 With $10 Million Necklace From Personal Collection
- Sleeping Beauties, Reawaken Your Hair with These Products That Work While You Sleep
- Jessica Biel Reveals Met Gala Prep Included Soaking in Tub With 20 Lbs of Epsom Salt
- Bev Priestman fired as Canada women’s soccer coach after review of Olympic drone scandal
- Ukraine-born House member who opposed aiding her native country defends her seat in Indiana primary
- McKenna Faith Breinholt cut from 'American Idol': What to know about the 'Queen of Smoky Voice'
- Horoscopes Today, May 6, 2024
- Judge sets April trial date for Sarah Palin’s libel claim against The New York Times
- Rita Ora Reveals 2024 Met Gala Dress Features Beads Older Than Anyone On This Planet
Ranking
- Surfer Bethany Hamilton Makes Masked Singer Debut After 3-Year-Old Nephew’s Tragic Death
- Ariana Grande's Met Gala 2024 Performance Featured a Wickedly Good Surprise
- Georgia woman identified as person killed in fall at Ohio State graduation ceremony
- Tornadoes spotted in Oklahoma as dangerous storms move across Great Plains
- Jessica Simpson's Husband Eric Johnson Steps Out Ringless Amid Split Speculation
- Pregnant Lea Michele Is Real-Life Sleeping Beauty Vibes at the 2024 Met Gala
- Boeing launch livestream: Watch liftoff of Starliner capsule carrying 2 NASA astronauts to ISS
- South Carolina lawmakers rekindle bill limiting how topics like race are taught
Recommendation
-
Mississippi woman pleads guilty to stealing Social Security funds
-
Billionaire Sudha Reddy Stuns at Met Gala 2024 With $10 Million Necklace From Personal Collection
-
Angel Reese celebrates her 22nd birthday by attending the Met Gala
-
Why Kim Kardashian Skipped the 2024 Met Gala After-Parties
-
IAT Community Introduce
-
Pamela Anderson stepped out in makeup at the Met Gala. Here's why it's a big deal.
-
Demi Lovato marks Met Gala return in Prabal Gurung gown with 500 hand-cut flowers
-
Wake Up and Enjoy This Look Inside the 2024 Met Gala