Following a lighter-than-expected inflation report, major US stock indexes surged to new records
On Wednesday, buoyed by a lighter-than-anticipated US consumer inflation report, both the S&P 500 and Nasdaq Composite soared to record highs, according to CNBC.
The S&P 500 surged 1.17 percent to close above 5,300 for the first time at 5,308.15, while the Nasdaq Composite climbed 1.40 percent, ending the day at 16,742.39. The Dow Jones Industrial Average also saw a significant rise, up by 349.89 points or 0.88 percent, to close at 39,908.00.
All three major indexes notched new record highs, marking the 23rd record close for the S&P 500, the 18th for the Dow, and the eighth for the Nasdaq this year.
This uptrend was supported by the consumer price index (CPI) for April, which rose by only 0.3 percent, below the Dow Jones estimate of a 0.4 percent increase. Year-over-year, the CPI climbed by 3.4 percent, aligning with forecasts.
Retail sales for April, however, remained unchanged, defying expectations of a 0.4 percent increase.
These economic reports have bolstered expectations for upcoming Federal Reserve rate cuts. According to the CME FedWatch Tool, there is now a 75.3 percent chance that the Fed will reduce rates at its September meeting, up from 65.1 percent just the day before.
“Markets really wanted these reports to be soft, and they got what they wanted,” commented Brian Nick, senior investment strategist at the Macro Institute.
He noted that the reports strengthen the case for the Fed to start cutting rates this year, which would benefit companies like Nvidia and other high-growth entities due to the impact of falling interest rates on their operations.
Shares of Nvidia jumped 3.6 percent upon the news, while tech giants Apple and Microsoft each gained over 1 percent.
Additionally, yields on US 10-year and 2-year Treasurys dropped following the economic reports, with the 10-year note falling about 10 basis points to 4.344 percent and the 2-year yield sliding roughly 9 basis points to 4.726 percent.
Despite a stumble last month due to concerns over persistent inflation, the latest data and reassurances from Federal Reserve officials suggesting that further rate hikes are unlikely have helped alleviate those fears.
This has contributed to the year's strong stock performance, particularly in technologies like artificial intelligence that are poised to enhance corporate profits.
The S&P 500 has risen over 11 percent year-to-date, reflecting robust investor sentiment buoyed by the potential for lower Fed rates and the promising advancements in technology sectors.
