Stocks extend post-election rally as the Fed cuts interest rates

• Indexes rose Thursday to continue a post-election rally after the Fed cut interest rates.

• The Fed cut rates by 25 basis points, a smaller move compared to its September meeting.

• The central bank appears slightly more focused on inflation as CPI data remains sticky.

Indexes ended higher on Thursday, extending a post-election rally after the Federal Reserve delivered a rate cut at the end of its latest policy meeting.

The Nasdaq jumped 1.5% to a new record high, while the S&P 500 climbed 0.8% to a new record. The Dow Jones Industrial Index was nearly flat after surging by more than 1,500 points on Wednesday.

Here’s where US indexes stood at the 4:00 p.m. closing bell on Thursday:

Major indexes gained as the Fed cut rates by 25 basis points, which was widely expected after an initial jumbo 50 basis point cut in September.

Chair Jerome Powell said the Fed will continue to be data dependent, but that it is prepared to adjust its easing pace as necessary.

Though some noted after the meeting that the Fed’s tone may have sounded less confident about the path of inflation, noting “progress” has been made rather than the previous wording of “further progress,” analysts were unconcerned.

“The Committee had used this language as a threshold to start cutting, so we interpret its removal as a reflection of the fact that the cutting cycle is already underway rather than as an indication of reduced confidence in the inflation outlook,” analysts from Goldman Sachs said in a Thursday note.

CPI data has been slightly sticky above the Fed’s 2% target, with the latest report showing inflation cooled in September but less than economists had expected.

The labor market, on the other hand, appears to be a smaller source of stress for the Fed, but Powell said it’s “prepared to adjust the pace and destination” of easing as the jobs data evolves.

“There seems to be less anxiety about the risk of rising unemployment and slowing job growth,” Fitch Ratings chief economist Brian Coulton said in a Thursday note.

The latest employment data, released Thursday, shows weekly jobless claims increased slightly to 221,000, a gain of 3,000 from the week before and in line with expectations.

Investors seem hopeful Trump’s light regulatory stance and proposals for corporate tax cuts will make for a more friendly business environment. Evercore ISI this week predicted the S&P 500 to jump 11% by next summer as the rally accelerates in Trump’s second term.

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