Dow Tops 37,000 As Dollar Tumbles On 'Dovish' Fed Decision

The Dow rallied to an all-time record Wednesday while the dollar tumbled after the Federal Reserve signaled it expects interest rate cuts in 2024.

The US central bank, as expected, kept its interest flat for the third straight meeting, while Fed projections suggested three interest rate cuts next year.

Fed Chair Jerome Powell acknowledged that the central bank believed "we are likely at or near the peak rate for this cycle," part of a presentation that led observers to rate the decision as "dovish."

The Fed "may not have cut rates today, but Fed Chair Powell certainly trimmed concerns that he would walk back the dovish optimism signaled by the sharp rise in equity prices and decline in bond yields since late October," said CFRA Research's Sam Stovall.

The Dow piled on 1.4 percent, or more than 500 points, to finish at 37,090.24, its first close ever above 37,000.

"Additional rate hikes no longer appear to be part of the conversation. It is all about the pace of cuts from here," said Mike Fratantoni, chief economist for the Mortgage Bankers Association.

"This is good news for the housing and mortgage markets."

While equities drove higher, the dollar fell sharply against other currencies, dropping 1.7 percent against the Japanese yen.

"Powell came off as dovish as he's been since this hiking cycle had begun," said James Stanley, a strategist at Forex.com, who also noted that gold prices strengthened ahead of Thursday meetings of the European Central Bank and Bank of England.

"If we hear a similar chorus of dovishness from the ECB and BoE, that could further prod gold prices," Stanley said.

Earlier, Paris and Frankfurt were marginally negative at the close with London clinging on to green, despite news of a worse-than-expected contraction of 0.3 percent in monthly UK economic output.

Frankfurt kept losses to a minimum after German Chancellor Olaf Scholz's coalition reached a last-minute deal to end a budget deadlock.

In Asia, Tokyo, Sydney and Wellington climbed but Hong Kong, Shanghai and Bangkok fell.

Oil prices ticked higher, one day after tumbling to six-month lows. The gains came after a US inventory report showed lower crude stockpiles compared with a week ago.

New York - Dow: UP 1.4 percent at 37,090.24 (close)

New York - S&P 500: UP 1.4 percent at 4,707.09 (close)

New York - Nasdaq: UP 1.4 percent at 14,733.96 (close)

London - FTSE 100: UP 0.1 percent at 7,548.44 (close)

Paris - CAC 40: DOWN 0.2 percent at 7,531.22 (close)

Frankfurt - DAX: DOWN 0.2 percent at 16,764.23 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,530.19 (close)

Tokyo - Nikkei 225: UP 0.3 percent at 32,926.35 (close)

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 16,228.75 (close)

Shanghai - Composite: DOWN 1.2 percent at 2,968.76 (close)

Euro/dollar: UP at $1.0878 from $1.0794 on Tuesday

Dollar/yen: DOWN at 142.89 yen from 145.45 yen

Pound/dollar: DOWN at $1.2617 from $1.2563

West Texas Intermediate: UP 1.3 percent at $69.47 per barrel

Brent North Sea crude: UP 1.04 percent at $74.26 per barrel