US key indices rose to fresh record highs at the opening bell on Wednesday, October 29, ahead of the U.S. Federal Reserve’s policy announcement later tonight.
The Nasdaq Composite climbed 0.8% to a new record high of 24,019. The S&P 500 gained 0.4% to 6,920, while the Dow Jones Industrial Average advanced 334 points, or 0.7%, to another peak of 48,040.
Today’s rally is also being led by Nvidia, with the stock gaining another 5.5% to hit a record high of $212.20, pushing the chipmaker’s market value past the $5 trillion mark, the first company to achieve this feat.
Slowing job market could propel another rate cut: Expert
The U.S. Federal Reserve is widely expected to lower its key benchmark rate for the second time this year, following a cut in September.
Analysts said the Fed is almost certain to reduce the benchmark federal funds rate to a range of 3.75%–4%, down from the current 4%–4.25%, with markets also pricing in another potential cut in December.
Signs of a slowdown in the job market and easing inflation could give the Fed additional room to act.
According to Jigar Trivedi, Senior Research Analyst at Reliance Securities, markets are “almost certain” (with a 95–98% probability) that the Fed will cut the federal funds rate by 25 basis points at the October meeting, bringing the target range to 3.75%–4.00%.
Trivedi noted that the labor market is showing clear signs of softening, with private data indicating slower job growth. Powell himself has acknowledged rising downside risks to employment.
He added that while inflation remains above the Fed’s 2% target, it has shown some moderation, headline CPI rose 3.0% year-on-year in September, giving the central bank room to ease policy.
However, Trivedi cautioned that despite expectations of a rate cut, the Fed continues to emphasize a “meeting-by-meeting” approach. Some officials remain wary of cutting too aggressively given lingering inflation risks.
He further explained that with market expectations already high for multiple cuts this year, any disappointment, such as a smaller cut or a less dovish outlook, could trigger negative reactions across equities, bonds, and other risk assets.
Powell’s remarks hold the key to future rate path
Though the 25-basis-point rate cut appears certain, traders will closely watch Fed Chair Jerome Powell’s comments after the meeting for cues on the trajectory of future rate cuts.
Earlier, Powell had described the previous rate cut as a risk-management measure in response to a softening labor market and reiterated that the central bank would continue to assess policy on a “meeting-by-meeting” basis.
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