Wall Street’s three major indexes notched record closes on Wednesday with the benchmark S&P 500 and the Nasdaq both advancing more than 1%, after a smaller-than-expected rise in consumer inflation bolstered investors’ hopes for interest rate cuts by the Federal Reserve.
All three indexes hit intraday record highs with technology stocks leading the charge. The blue-chip Dow drew closer to the 40,000 milestone. U.S. Treasury yields fell to more than five-week lows.
Canada’s benchmark stock index snapped a three-day run of declines, but its advance was much more modest.
Tepid U.S. Consumer Price Index (CPI) data for April fueled optimism that inflation was easing after three months of higher-than-expected numbers. This led traders to raise bets that the Fed will cut its policy rate in September and December.
Other data released on Wednesday showed U.S. retail sales were unexpectedly flat in April as higher gasoline prices pulled expenditure away from other goods, indicating that consumer spending was losing momentum.
“It’s a relief we didn’t have a fourth hot CPI report,” said Carol Schleif, chief investment officer at the BMO family office in Minneapolis. “Clearly markets liked that the inflation numbers looked softer. Retail sales came in softer. It’s pretty clear evidence that the economy came off the boil and is operating at a more sustainable pace.”
Equities had built on Tuesday’s gains, when Fed Chair Jerome Powell’s assessment of U.S. growth, inflation and the interest rate outlook reassured investors after hotter-than-expected producer prices for April.
The Dow Jones Industrial Average rose 349.89 points, or 0.88%, to 39,908.00 while the S&P 500 gained 61.47 points, or 1.17%, at 5,308.15.
The Nasdaq Composite advanced 231.21 points, or 1.40%, to 16,742.39, its second record close in as many days. The S&P 500 and the Dow last registered record closing prices on March 28.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 41.42 points, or 0.2%, at 22,284.76.
The utilities and real estate sectors, which include many high-dividend paying stocks and benefit from lower bond yields, rose 1.3% and 0.5% respectively.
Technology in Toronto was also a standout, adding 1.2%.
The energy sector was less influential, gaining 0.2%. Oil settled 0.8% higher at US$78.63 a barrel but investors were also mindful of a large wildfire threatening the major Canadian oil sands city of Fort McMurray.
Among the S&P 500′s 11 major industry sector indexes, most gained ground with rate-sensitive technology stocks and real estate outpaced the rest with respective gains of 2.3% and 1.7%.
Consumer discretionary was the biggest laggard, ending the day virtually unchanged from Tuesday.
Among megacap stocks, Nvidia was the S&P 500′s biggest index point contributor, rising 3.6%. Microsoft, the benchmark’s next biggest boost, added 1.7% and Apple advanced 1.2%.
Leading S&P 500 percentage gains was a 15.8% advance in Super Micro Computer Inc, which like Nvidia is seen as a good way to bet on the take-off in demand for artificial intelligence technology.
In earnings, investors waited for Walmart to provide more colour on consumer spending in its quarterly report due out early on Thursday. The retail giant’s shares ended down 0.05%, marking its third straight day of declines.
Retail investor darling GameStop ended down 18.9%, snapping this week’s sharp rally driven by “Roaring Kitty” Keith Gill, a central figure behind the 2021 meme stock frenzy, who posted bullish comments on social media platform X.
Other meme stocks followed suit with AMC Entertainment dropping 20% and Koss Corp ending down 19.2%.
Trading volume was brisk with 14.78 billion shares changing hands on U.S. exchanges, according to the latest tally, compared with the 11.11 billion average for the last 20 sessions. Advancing issues outnumbered decliners by a 3.02-to-1 ratio on the NYSE, which had 645 new highs and 40 new lows. On the Nasdaq advancing issues outnumbered decliners by a 1.69-to-1 ratio while it recorded 285 new highs and 76 new lows. The S&P 500 posted 71 new 52-week highs and no new lows.
Reuters, Globe staff
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