Stocks Hit Record High a Day After Fed’s Big Interest Rate Cut

Stocks on Wall Street notched new highs on Thursday, after a momentous cut to interest rates from the Federal Reserve invigorated a global market rally.

Markets had been butting up against the record for the past two weeks, after recovering from a round of turmoil in late July and early August. But the Fed’s announcement on Wednesday that it would lower rates by a half a percentage point erased uncertainty about a decision that has loomed over financial markets for months.

The Fed’s cut was double the quarter-point adjustment it typically makes, and the central bank projected additional cuts to come this year.

It often takes the market a day or two to determine its path after a big event like the Fed decision, and stocks had wobbled in the immediate aftermath of the rate cut Wednesday afternoon before optimism took hold in the markets overnight.

With a 1.7 percent gain on Thursday, the S&P 500 crossed above its last closing record, reached in mid-July. The Dow Jones industrial average rose 1.3 percent, and also closed at a record. The Russell 2000 index of smaller companies more sensitive to the ebb and flow of the economy rose more than 2 percent.

“This can only be a good thing for equities,” said Colin Graham, head of multi asset strategies at Robeco, an asset management firm.