Wall Street scaled all-time highs on Thursday as global markets welcomed the US Federal Reserve’s first interest rate cut in four years.

The benchmark S&P 500 climbed 1.7% to close at its first record high since July. The Dow Jones Industrial Average rose 1.3% and also hit a record. The technology-focused Nasdaq Composite rallied by 2.5%.

When the Fed announced it would reduce rates from a two-decade high on Wednesday, cutting by 50 basis points, America’s leading share indices closed lower. On Thursday, however, as global markets welcomed the news, they bounced back.

As inflation continues to fade in the US, policymakers at the Fed also expect to cut rates by an additional 50 basis points this year, according to projections released alongside this week’s announcement.

Some analysts said the market could be relieved that Jerome Powell, the Fed chair, was able to thread the needle in his press conference and suggest the deeper-than-usual cut was just a “recalibration” of policy and not an urgent move it had to take to prevent a recession.

“I don’t see anything in the economy that suggests the likelihood of a downturn is elevated,” Powell told reporters. “I don’t see that.”

The FTSE 100 climbed 0.9% in London after the Bank of England opted to hold interest rates steady. The next key central banking move is due on Friday, when the Bank of Japan will announce its latest decision on rates.

As the Fed sought a so-called “soft landing” for the US economy, where price growth is normalized and recession avoided, US stock markets have enjoyed an extraordinary year.

The S&P 500 is up by more than 20% since the start of 2024. The Nasdaq has risen 22% over the same period. The Dow Jones Industrial Average has increased 11%.

Associated Press contributed reporting.