On Thursday, U.S. stock markets largely built on their strong post-election gains, with all three major indices reaching all-time highs during trading, following a decision by the Federal Reserve to lower interest rates.

The Federal Reserve reduced its short-term benchmark federal funds rate by 0.25 percentage points, bringing it down to a range of 4.5% to 4.75%. This marks a decrease from a recent peak of 5.25% to 5.5%—the highest in 23 years—just a few months ago. This is the second consecutive rate cut, following a significant half-point cut during the Fed’s last meeting in September.

While the Dow finished with no change at 43,729.34, the Standard & Poor’s 500 Index closed at a new record of 5,973.10, up 0.74%. The Nasdaq Composite rose 1.51%, reaching a record high of 19,269.46.

The yield on the 10-year Treasury bond increased abruptly on Wednesday, a reaction some experts linked to fears that President-elect Donald Trump might increase the deficit and impose extensive tariffs, potentially pushing inflation higher. However, the yield fell after the Fed’s announcement, decreasing by 0.091% on Thursday to settle at 4.335%.

What does the Fed expect for future rates?

Jerome Powell, the Chairman of the Fed, expressed optimism about the economy, indicating that further small rate cuts could be forthcoming, although the timing would depend on forthcoming data.

James Knightley, chief international economist at ING bank, noted, “The Fed acknowledges that their policies remain tight and that more cuts seem likely, but the pace of those cuts might slow.” He remarked that they were hesitant to address the potential impact of Trump’s policies, cautioning that a bit stronger growth alongside rising inflation might lead to a more tempered approach to rate reductions.

Trump has proposed significant tariffs and tax cuts, raising concerns among some economists about a possible resurgence of inflation.

Currently, economists are divided on whether the Fed will pause rate cuts at its next scheduled meeting in December, or if it will implement another quarter-point cut before potentially pausing.

Earnings reports following the market closings

Amid significant news this week, including the election on Tuesday and the Fed meeting on Thursday, companies continued to disclose their earnings reports.

Some key earnings results after the market closed include:

• Pinterest: Surpassed expectations for revenue and earnings in the third quarter but provided a weaker outlook for the fourth quarter.
• Rivian: Fell short of third-quarter projections and revised its full-year earnings forecast downward.
• Airbnb: Slightly exceeded third-quarter sales estimates but reported lower than expected earnings.