Dow hits 42,000 for first time in Fed fueled runInvestors celebrated the Federal Reserve's super-sized interest rate cut and what is likely the start of a longtime coming easing cycle that should lower borrowing costs for consumers and businesses.

It’s a September to remember courtesy of the Federal Reserve, which delivered a super-sized rate cut for investors on Wednesday. 

The Dow Jones Industrial Average closed out the week above 42,000 after first hitting that milestone on Thursday. It took just 45 days since the last 1,000-point milestone, as tracked by Dow Jones Market Data Group. 

THE FED CUT RATES FOR FIRST TIME SINCE 2020: WHAT TO KNOW

The companies which helped the Dow deliver include, McDonald’s served up the most point gains at over 208, with 3M second, while embattled Boeing was the biggest drag, subtracting over 193, followed by Honeywell International. 

IBM, American Express and Home Depot also helped lift the Dow to the fresh marker. 

The S&P 500 notched another fresh record before ending the week slightly below that level. 

Intel and Qualcomm were movers after The Wall Street Journal reported the two were in discussions about a possible combo. Still, the tech-heavy Nasdaq Composite slipped to end the week. 

The Fed, on Wednesday, announced its first rate cut since March 2020, taking the target range to 4.75% to 5%, with Chairman Jerome Powell signaling the significance of the fresh shift. 

"This recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we begin the process of moving toward a more neutral stance, we are not on any pre-set course. We will continue to make our decisions meeting by meeting," he said. 

Policymakers, in their projections, outlined rates could fall to 4.4% by year-end, 3.4% by 2025 and 2.9% by 2026. Still, the team at Wells Fargo Investment Institute says the outlook may be too optimistic.  

"Our expectation of two more rate cuts in 2024 is in line with the Fed’s current view, but we find that the FOMC is still priced for a more optimistic outcome regarding future Fed rate cuts in 2025. As the economic recovery resumes in the second half of 2025, we think it will prove difficult for inflation to decline further toward the Fed’s 2.0% inflation target" they wrote. 

MORTGAGE RATES SLIDE POST FED CUT

Lower borrowing costs are favorable for corporations and consumers seeking mortgages and personal and auto loans, as well as other lending levers.  

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The rate for a 30-year fixed mortgage fell to 6.09% on Thursday. A year ago it averaged 7.19%. 

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