Fed cuts interest rates 50 points just before Trump-Harris election; Stock markets rally, Nasdaq, Dow open up big

The Federal Reserve cut interest rates by 50 basis points Wednesday roughly six weeks before the 2024 presidential election between former President Donald Trump and sitting Vice President Kamala Harris.

It is the first rate cut by the U.S. central bank since March 2020. The Fed had imposed a series of interest rate hikes to combat post-pandemic inflation.

U.S. prices are up 20% since President Joe Biden (and Harris) took office in 2021 and 23% since the COVID-19 pandemic.

Fed Chairman Jerome Powell insisted the pre-election rate cut was not politically voted or aimed at helping Harris. The cut came 48 days before the election.

"Our job is to support the economy on behalf of the American people," Powell said Wednesday.

He said there were no political considerations in the decision.

The rate cut sparked strong openings for U.S. stock markets Thursday with the Dow Jones Industrial Average opening up more than 500 points and the Nasdaq up more than 400 points.

Tech, home improvement and homebuilder stocks were up including Amazon.com (Nasdaq: AMZN), NVDIA (Nasdaq: NVDA), Apple (Nasdaq: AAPL), Home Depot (NYSE: HD), Lennar Corp. (NYSE: LEN) and Microsoft (Nasdaq: MSFT).

With today's rally so far, the Dow is up more than 118% from the economic depths of the COVID-19 pandemic, according to Google Finance. The Nasdaq is up 161% since the pandemic and its historical wealth transfers.

Inflation and high interest rates on credit cards, mortgages and auto loans have stressed many U.S. households who cite inflation as their main election year concern.

Democrats and Harris — who was installed at the top of the 2024 ticket after party power brokers pressured Biden to quit over age concerns — are trying to erode Trump's economic advantage in polls.

Trump has promised to erase taxes on tip, overtime and Social Security payments. Harris wants to give more federal tax credits help for families with children, small business startups and first-time home buyers.

Trump said Wednesday either the 50-point cut indicated either concerns about the state of the economy or the Fed "is playing politics."

Americans have a record $17.8 trillion in household debt, according to the New York Federal Reserve Bank.