US Markets
Wednesday, May 15th, 2024 3:36 pm EDT
Key Points
- The S&P 500 and Nasdaq Composite reached record highs on Wednesday, driven by a lower-than-expected U.S. consumer inflation report, with the S&P 500 gaining 0.9% and the Nasdaq 0.1%.
- The Consumer Price Index (CPI) for April rose by 0.3%, slightly below the expected 0.4%, with a year-over-year increase of 3.4%, aligning with forecasts. Core CPI also matched expectations, fueling optimism for potential Federal Reserve rate cuts, now seen as more likely in September.
- Major tech stocks, including Nvidia, Apple, Microsoft, and Netflix, saw gains following the inflation report, while Treasury yields dropped. The S&P 500 has surged over 10% year-to-date, bolstered by expectations of lower Fed rates and enthusiasm around artificial intelligence.
The S&P 500 and Nasdaq Composite reached record highs on Wednesday, propelled by a U.S. consumer inflation report that was milder than anticipated. The broad market index increased by 0.9%, the Nasdaq by 0.1%, and the Dow Jones Industrial Average surged by 271 points or 0.7%, nearing an all-time high. The Consumer Price Index (CPI) rose 0.3% in April, slightly below the expected 0.4%, and increased by 3.4% year-over-year, matching expectations. Core CPI, excluding food and energy prices, also met forecasts with a 0.3% monthly and 3.6% annual increase.
Despite retail sales remaining flat in April against an expected 0.4% rise, the reports raised hopes for Federal Reserve rate cuts. Fed funds futures trading data now indicates a 51.7% probability of a rate cut in September, up from 44.9% the previous day. Brian Nick, a senior investment strategist, noted that the soft inflation readings supported the case for rate cuts, benefiting companies like Nvidia, which saw nearly a 3% rise in shares. Tech giants Apple, Microsoft, and Netflix also posted gains over 1%.
The 10-year Treasury yield fell by 8 basis points to 4.363%, and the 2-year Treasury yield dropped by more than 7 basis points to 4.749%. Stocks have surged in 2024, driven by expectations of lower Fed rates and optimism about artificial intelligence’s potential to boost profits. The S&P 500 has risen over 10% year-to-date, despite a recent stumble due to inflation concerns, which were alleviated by the new data and comments from Fed officials suggesting a halt in rate hikes.
Skyler Weinand, Chief Investment Officer at Regan Capital, stated that while the Fed has room to cut rates as early as September, the path isn’t certain yet, as more weak inflation data is needed to meet the Fed’s 2% target. Meanwhile, BMO Capital Markets Strategist Brian Belski raised his S&P 500 target to 5,600, citing underestimated market momentum.
Despite a flat retail sales report, the positive CPI data outweighed concerns, leading to a market rally. About four stocks on the NYSE rose for every decliner, reflecting strong trader confidence. The S&P 500 and Nasdaq opened at new all-time highs, with the S&P 500 adding 0.4% and the Nasdaq 0.6%. Notable premarket moves included AMC Entertainment and GameStop shares falling due to the fading meme stock craze and a significant drop in Petrobras shares after a CEO change.
Overall, the lighter-than-expected CPI report bolstered market sentiment and expectations for Federal Reserve rate cuts, driving stocks to new highs and alleviating recent inflation worries.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/14/stock-market-today-live-updates.html
