US stocks rose on Thursday after the Federal Reserve decided to cut interest rates by 50 basis points.
The Dow Jones Industrial Average closed above 42,000 for the first time, ending the day up 1.3% at a record 42,025.19. The S&P 500 also closed the day at a record high for the first time since July, closing up 1.7% at 5,713.64. The Nasdaq Composite also saw gains, ending the day up 2.51%.
The increase comes after the Fed announced a half-point rate cut on Wednesday, its first in four years. The central bank expects another half-point of cuts over the rest of the year, a sign of confidence in the labor market.
““Markets love rate cuts, especially large ones when the economy is strong,” Jamie Cox, Managing Partner for Harris Financial Group, said in an emailed statement.
Eight of the S&P 500’s 11 sector indexes rose, with tech stocks seeing some of the most significant gains. Apple ended the day up 3.7%, Meta up 3.9% and Tesla up 7.4%.
Federal Reserve Rate Cuts: Lower mortgage rates will bring much-needed normalcy to the housing market
What does this mean for my 401(k)?
Wall Street’s performance is good news for investors setting aside money for retirement.
USA TODAY previously reported that the S&P 500 is considered one of the best indicators of the health of Wall Street. When the benchmark index rises, Americans’ 401(k)s rise, too.
“This is excellent, good news for all of us saving for retirement,” said Quincy Krosby, chief global strategist for LPL Financial. While future pullbacks and periods of volatility are to be expected, “the path for markets is historically higher.”
This article originally appeared on USA TODAY: S&P 500, Dow close at record highs after Federal Reserve cuts
