The New York stock market closed higher yesterday after the Federal Reserve cut interest rates and raised the prospect of lower inflation next year. The Dow Jones index rose 1.05%, the Nasdaq technology index gained 0.33% and the expanded S&P 500 gained 0.67%.
The Fed cut interest rates by a quarter of a percentage point for the third time in a row. The new cut will keep interest rates in a range between 3.50% and 3.75%, in line with market expectations. Rate cuts are generally welcomed by Wall Street because they tend to boost growth and thereby improve the outlook for corporate earnings. The United States is experiencing simultaneously accelerating inflation and higher unemployment, scenarios that theoretically imply opposite actions from the Fed.
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