Markets celebrate Fed decision; Wall Street rally

After the US Federal Reserve (Fed) began the interest rate cut cycle with a 0.50 percentage point cut, global stock markets applauded that the US central bank will be able to soft landing for the world’s largest economy, moreover, that growth can be boosted.

This caused the dollar to strengthen internationally, since according to the DXY index, which measures its performance against a basket of six international currencies, it appreciated 0.07 percent, to 100.355 units.

US stocks soared, with the Dow Jones closing above 42,000 points for the first time in its history.

Sign of trust

The S&P 500 rose 1.7 percent to 5,713.64 points, while the Dow gained 1.2 percent, with both indexes trading at record highs. The technology-focused Nasdaq led the gains with a 2.49 percent increase to 18,011.51 points.

Wall Street absorbed Fed Chair Jerome Powell’s message that deep rate cuts in a relatively strong economy will ultimately stave off the risk of recession, and is a sign of confidence, not panic, over current conditions.

The riskiest, but most profitable sectors of the market were behind this rally On Wall Street, shares of tech giants Alphabet, Microsoft and Meta rose, while Apple gained more than 3 percent. Tesla and Nvidia also soared.

Wall Street investors have taken positions in equities due to expectations of further rate cuts by the Fed, making investing in stocks more attractive.

The Mexican Stock Exchange (BMV), for its part, recorded its sixth consecutive gain, and yesterday advanced 0.64 percent, equivalent to 335.15 units, to close at 52,918.04 points.

The Mexican stock market was boosted by gains in Televisa, 7.84 percent; Cemex, 3.27 percent, and Bimbo, 2.43 percent, among others.

For its part, the Mexican currency reported few movements compared to the previous close (19.2941 units per dollar) spot), closing at 19.2829 on the interbank market. However, it tended to depreciate against the US currency, reaching 19.36 pesos per dollar during the session.

According to data from the Bank of Mexico, the exchange rate ranged from a maximum of 19.3600 units to a minimum of 19.2130.

Close to the change of government in October and the US elections in November, the exchange rate shows volatility.

With the Fed’s change of course now in place, some analysts have turned their attention to other issues. A weekly report from the Labor Department on initial jobless claims, released Thursday, showed a drop to the lowest level in four months. The figure for the week ending Sept. 19 was 219,000, while the previous week’s total was revised up to 231,000.

Meanwhile, oil prices rose by more than one percent. Brent crude rose 1.67 percent to $74.88 a barrel, further moving away from the $69 levels reached last week. Meanwhile, U.S. WTI light crude gained 1.47 percent to $71.95 a barrel due to the Federal Reserve’s significant interest rate cut.