US Stocks Hit Record Highs on Fed Rate Cut, China Trade Optimism
Major indexes rally as the Federal Reserve signals further easing and Washington and Beijing resume high-level trade dialogue.
Major US stock indexes, including the S&P 500 and Nasdaq, surged to all-time highs for a second straight day, propelled by a dual dose of optimism from monetary policy and international trade relations.
The rally gained momentum after the Federal Reserve initiated its first interest rate cut of the year, lowering its benchmark rate by 0.25% to a range of 4.00%-4.25%. In his commentary, Fed Chair Jerome Powell cited a softening labor market and persistent, elevated inflation as key justifications for the policy shift, signaling that the central bank is prepared to act further to sustain the economic expansion. Projections from the committee suggest two additional cuts may be forthcoming in 2025.
Adding to the bullish sentiment was a "productive" phone conversation between US President Donald Trump and Chinese President Xi Jinping. The discussion, which covered easing trade tensions and a potential deal for the social media app TikTok, has buoyed investor hopes for a de-escalation in the long-running trade dispute. The two leaders plan to meet in November, providing a timeline for further negotiations. While the dialogue marks a positive step, the broader US-China trade rivalry continues to be a defining feature of the global economy, with significant tariffs remaining in place. The combination of expected monetary easing and thawing trade relations has created a powerful tailwind for equities, pushing market benchmarks into record territory amid elevated trading volume.