The Dow gained 512.30 points, or 1.40 per cent, to end at 37,090.24

The Dow Jones Industrial Average climbed to a record high on Wednesday as the Fed signalled it would cut rates several times next year, satisfying investors who hoped the central bank would finally acknowledge the slowing trend of inflation with a less-aggressive monetary stance.

The 30-stock Dow gained 512.30 points, or 1.40 per cent, to end at 37,090.24. This marks the first time the benchmark ended above the 37,000 mark — surpassing an earlier record set in January 2022. At its session high, the Dow hit 37,094.85.

The S&P 500 climbed 1.37 per cent to close the session at 4,707.09 — surpassing 4,700 for the first time since January 2022 — while the Nasdaq Composite jumped 1.38 per cent to 14,733.96. All three major averages reached new 52-week highs.

The central bank held the benchmark overnight borrowing rate steady in the 5.25 per cent to 5.5 per cent range as expected, but more importantly it forecast three rate cuts in 2024, which were more than it had earlier indicated. Investors have been increasingly hoping for the Federal Reserve to give a clearer signal that it would start cutting rates next year with recent inflation data easing.

The Federal Reserve’s meeting statement acknowledged that inflation “has eased” over the past year and the Fed lowered its inflation forecast for 2024, seeing a 2.4 per cent rate drop from 2.6 per cent.

The Federal Reserve has given the market an early holiday gift today when, finally, for the first time, they have commented positively about inflation, said Gina Bolvin, president of Bolvin Wealth Management Group. It seems that the Fed is moving in the market’s direction, instead of the market moving towards the Fed. The Santa Claus rally may continue.