Global Markets Hit Record Highs as Fed Signals 2027 Rate Cut Path

New York — Global equity markets rallied to record levels this week after Federal Reserve chair Jerome Powell laid out a slower, more predictable path for rate cuts extending into 2027. The S&P 500 crossed 6,900 for the first time, the FTSE 100 broke 9,400, and Japan's Nikkei 225 pushed through 48,000.

Driving the rally is a rare combination: cooling inflation, resilient corporate earnings, and heavy capital expenditure tied to AI infrastructure. Nvidia briefly touched a 5-trillion-dollar market capitalization on Wednesday before profit-taking pulled it back. Microsoft, Alphabet, Amazon, and Meta collectively added more than 400 billion dollars in market value across the week.

Outside tech, the story is more nuanced. European luxury names Louis Vuitton–owner LVMH and Hermès rose sharply on stronger Chinese demand, while energy majors underperformed as oil slipped below 68 dollars a barrel. Emerging markets attracted the largest weekly inflow since 2021, with Indian and Brazilian equities leading.

Bond markets welcomed the Fed's clarity. The 10-year Treasury yield settled at 3.72 percent, its lowest in nearly a year. Corporate credit spreads tightened to post-pandemic lows, and investment-grade issuance is on pace for a record month.

Analysts warn the setup is not risk-free. Valuations for AI-linked names now sit two standard deviations above long-run averages. Geopolitical flashpoints — from the South China Sea to the Sahel — could rapidly shift sentiment. And several regional banks continue to carry commercial-real-estate exposure that has yet to be fully marked down.

Still, for now, the direction is up. 'This is a market that trusts the disinflation story and believes in the AI capex cycle,' said Savita Subramanian at Bank of America. 'Both convictions need to hold for the rally to continue.'