Interest rates and U.S. stock market update

Interest rates and U.S. stock market update

The U.S. stocks reacted to the news that Federal Reserve made the decision to lower the interest rates for the second time in 2019. On Wednesday, the rate-setting committee decided to cut the interest rates by 0.25%. It was not an easy decision as policymakers of the Federal Reserve had different ideas about this move.

At the one hand, unemployment is at the lowest since in 50 years. U.S economy is growing for more than ten years after the great recession. The salaries also benefited from the strong economy. The U.S. consumers spend a lot of money which supports the economy.

On the other hand, the prolonged trade war between the U.S. and China had a negative impact on the economy. This dispute started over a year ago. The two biggest economies in the world are unable to come to an agreement.

In this situation, the Federal Reserve decided that it was time to lower the interest rates. It is important to note that some of the policymakers were against this decision. For example, the Boston Fed President Eric Rosengren and Kansas City Fed President Esther George. They believe that there is no need to cut interest rates.

U.S. stocks on Thursday

U.S. stocks reacted to this news. The Dow Jones Industrial Average increased by 95 points to 27,242. The S&P 500 rose by 13 points to 3,020. Another U.S. index which is the NASDAQ composite increased by 53 points to 8,230.

The shares of tech giants such as Microsoft, Alphabet, and others increased on Thursday. For instance, the shares of Alphabet rose by 0.3%. At the same time, the shares social media giant Facebook also increased by 0.3%.

Another important factor which can influence the stock markets in the U.S. and elsewhere in the trade talks scheduled for October. The positive outcome of this meeting will improve the overall situation.