Dow closes above 37,000 for first time ever as Powell hints at rate cuts

The Dow Jones Industrial Average ended the week scoring its third record close after crossing 37,000 for the first time in history Wednesday after Federal Reserve Chairman Jerome Powell signaled policymakers are likely done raising interest rates and cuts could soon be in the cards.

“We believe that we are likely at or near the peak rate for this cycle,”  Powell said during a press conference following the decision. “Participants didn’t write down additional hikes that we believe are likely. So, that’s what we wrote down. But participants also didn’t want to take the possibility of further hikes off the table. So, that’s really what we were thinking.”

Policymakers, in their annual projections, priced in the potential of three rate cuts, with the federal funds rate falling to a range of 4.4% to 4.9%, down from the current 5.25% to 5.50%.

The Dow, which rose nearly 3% for the week, registered its longest weekly streak of gains since February 2019, as tracked by Dow Jones Market Data Group.

“This is great news for the equity market and the U.S. economy,” Wharton University professor Jeremy Siegel said during an appearance on “The Claman Countdown” following Powell’s press conference Wednesday. Siegel predicts the first potential rate cut will come in March, in line with the CME’s FedWatch Tool. 

UnitedHealth Group has added the most points to the benchmark since the 36,000 level, while 3M has subtracted the most, according to Dow Jones Market Data Group.

Apple hit an all-time high this week and has added $1 trillion in market cap this year alone, driving it just above $3 trillion. For the year, shares have risen 52%. 

The S&P 500 rose 2.5% this week, its longest win streak since September 2017.

And the Nasdaq Composite gained 2.8%, its best week since June. 

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As for the economy, inflation, while easing, remains a wildcard for policymakers. 

“Inflation has eased from its highs, and this has come without a significant increase in unemployment. That’s very good news, but inflation is still too high. Ongoing progress in bringing it down is not assured, and the path forward is uncertain,” Powell added. 

INSIDE THE NOVEMBER CPI

Earlier this week, the consumer price index for November eased, but certain price pockets remain high, such as rent, which is up 6.5% on an annual basis. Beef and veal prices are 8.7% higher than a year ago. 

*This article has been updated to reflect Friday’s closing prices.