Dow gains almost 500 points, S&P 500 ends shy of record high after Fed’s final rate cut of 2025 bolsters case for early start to ‘Santa Claus rally’

Dow gains almost 500 points, S&P 500 ends shy of record high after Fed’s final rate cut of 2025 bolsters case for early start to ‘Santa Claus rally’Listen(5 min)Listen(5 min)The S&P 500 index narrowly missed a fresh record close Wednesday and the Dow Jones Industrial Average finished with strong gains after the Federal Reserve’s decision to deliver a final quarter-point rate cut for 2025, which gave investors optimism that equities can keep climbing through year’s end.The Dow DJIA rose 497.46 points, or almost 1.1%, to close at an almost one-month high of 48,057.75, while the S&P 500 SPX advanced 46.17 points, or 0.7%, to end at 6,886.68, or just shy of its 6,890.89 record close reached on Oct. 28. Meanwhile, the Nasdaq COMP lagged, finishing up by 77.67 points, or 0.3%, at 23,654.16, the highest level since Nov. 3.Wednesday’s policy decision by the central bank bolstered investor confidence about the three-year rally in stocks, which has thrived despite uncertainty around inflation, the U.S. deficit, a weakening labor market and higher long-term borrowing costs for households and the economy.Stocks also have benefited from a backdrop where strong corporate-earnings growth, the promise of AI, and stimulus expected next year from President Donald Trump’s signature tax and spending package could give fresh legs to the rally.About the AuthorVivien Lou Chen is a Markets Reporter for MarketWatch. You can follow her on Twitter @vivienlouchen.Isabel Wang is a Markets Reporter for MarketWatch.Copyright © 2025 MarketWatch, Inc. All rights reserved.