S&P, Nasdaq end at records as inflation data supports rate cut view
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[March 01, 2024] By
Chuck Mikolajczak and Noel Randewich
NEW YORK (Reuters) -The S&P 500 and Nasdaq closed at record highs on
Thursday, buoyed by tech stocks linked to AI, while inflation data and
comments from Federal Reserve officials helped shape expectations for
the timing of the central bank's interest rate cuts.
Heavyweight chipmaker Nvidia advanced 2.08% as one of the biggest boosts
to the benchmark S&P index and Nasdaq while smaller rival Advanced Micro
Devices surged 9.06%. Those and other technology companies have been the
centerpiece of a Wall Street rally in recent months, fueled by optimism
over growth prospects related to artificial intelligence.
Dell Technologies, which sells AI-optimized servers made with Nvidia's
high-end processors, rose 1.51% ahead of its report after the bell.
Traders added to bets the Fed will cut rates in June, according to CME's
FedWatch Tool, after a Commerce Department report showed U.S. prices
picked up in January in line with expectations amid strong gains in the
costs of services, while annual inflation was the lowest in three years.
"Without kind of a hawkish surprise here, which it wasn't, it was soft
or at least in line, then there's no real reason for the market to
expect the Fed to get more hawkish than they already outlined," said
Ross Mayfield, investment strategy analyst at Baird in Louisville,
Kentucky.
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"It doesn't matter what you think they should do. It's what they say
they're going to do and once again, the market has been wrestled back
into line to where the Fed said they'd be."
The Dow Jones Industrial Average rose 47.37 points, or 0.12%, to
38,996.39. The S&P 500 gained 26.51 points, or 0.52%, to 5,096.27 and
the Nasdaq Composite advanced 144.18 points, or 0.90%, to 16,091.92.
The Nasdaq closed above its prior record high of 16,057.44 set on Nov.
21, 2021, while the S&P bested its closing record of 5,088.80 set just
last week.
For the month, the S&P 500 gained 5.17%, the Nasdaq jumped 6.12 pct, and
the Dow climbed 2.22%. Each of the three major indexes registered a gain
for February, their fourth straight monthly advance. The Russell 2000
Small Cap index rose 5.45% for the month.
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Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., February 28, 2024. REUTERS/Brendan McDermid
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Atlanta Fed President and voting member Raphael Bostic stressed
taking data-dependent approach to monetary policy, saying it was
going to be a bumpy path to the Fed's 2% inflation target, and
repeated his view that he sees the central bank cutting rates "in
the summer months."
Chicago Federal Reserve Bank President Austan Goolsbee said
improvements last year in the supply of goods and the labor market
paved the way for inflation declines this year, indicating he
remains supportive of rate cuts later this year.
Reports on consumer and producer prices earlier in February, which
pointed to stubborn inflation, had led investors to dial back
expectations of rate cuts to June. At the beginning of this year,
traders viewed March as the likely starting point for the Fed's
easing cycle.
Meanwhile, initial jobless claims for the week ended Feb. 24 stood
at 215,000, greater than expectations of 210,000, economists polled
by Reuters said.
Gains on the Dow were held in check, partly by a 1.59% fall in
Boeing after a report of a probe by the Department of Justice.
Snowflake slumped 18.14% after the cloud data analytics company
forecast first-quarter product revenue below Wall Street estimates
and said CEO Frank Slootman was retiring.
Advancing issues outnumbered decliners by a 2.7-to-1 ratio on the
NYSE while on the Nasdaq, advancing issues outnumbered decliners by
about a 1.57-to-1 ratio.
The S&P 500 posted 65 new 52-week highs and one new low and the
Nasdaq recorded 267 new highs and 82 new lows.
Volume on U.S. exchanges was 13.88 billion shares, compared with the
11.78 billion average for the full session over the last 20 trading
days.
(Editing by Richard Chang)
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