Fed inaugurates rate reduction cycle; stock markets celebrate with highs

Mexico City, After the United States Federal Reserve (Fed) inaugurated the cycle of lowering interest rates with a cut of 0.50 percentage points, the global stock markets, mainly the US ones with maximum levels, applauded that the US central bank will be capable of a “soft landing” for the world’s largest economy, moreover, will boost its growth.

The above caused the dollar to strengthen internationally, since according to the DXY index, which measures its behavior 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, amid growing optimism.

The S&P 500 rose 1.7 percent, to 5,713.64; while the Dow Jones rose 1.2 percent, with both indices trading at all-time highs. The technology-focused Nasdaq led gains with a 2.49 percent increase to 18,11.51.

Wall Street has absorbed Chairman Jerome Powell’s message that a deep cut in a relatively strong economy will ultimately avert 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, as rate-sensitive growth stocks rose, such as technology giants such as Alphabet, Microsoft and Meta, which rose while Apple advanced more than 3 percent. Tesla and Nvidia also soared.

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

For its part, the Mexican peso reported few movements with respect to the previous close (19.2941 units per dollar spot), closing at 19.2829 pesos per dollar in the interbank market. However, its tendency was 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 operated between a maximum of 19.3600 units and a minimum of 19.2130 units.

With the Fed’s change of course already made, some in the market have returned their focus to data reports, preparing for possible volatility. 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 September 19 was 219 thousand, while the previous week’s total was revised upwards by one thousand, reaching 231 thousand.

Meanwhile, oil prices rose more than one percent. Brent crude oil rose 1.67 percent to $74.88 per barrel, moving further away from levels below $69 reached last week. Meanwhile, US light oil WTI gained 1.47 percent, to $71.95 per barrel, due to the significant cut in interest rates by the US Federal Reserve.