Dow tops 37,000 as dollar tumbles on 'dovish' Fed decision

NEW YORK - The Dow rallied to an all-time record on 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.