The Dow Jones Industrial Average, S&P 500 and Nasdaq
Composite indexes all closed at record highs today. We’ve had several weak jobs
reports showing that the rate of job growth is slowing. Market participants
believe that the slowing pace of job creation gives the Federal Reserve reason
to cut interest rates when they meet later this month. Lower interest rates can
reduce borrowing costs for businesses and individuals. In theory, this can lead
to economic growth. Lowering interest rates is one of the tools the Federal
Reserve has used in the past to encourage economic activity and pull the
economy out of a recession. It is unclear if lower interest rates will have the
same effect when the economy is not in a recession. If the Federal Reserve
decides not to cut interest rates as expected, you could see markets reverse
course and give back much of the recent gains.
