Wall Street boasts record closes as inflation data fuels rate-cut bets
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[May 16, 2024] By
Sinéad Carew and Bansari Mayur Kamdar
(Reuters) -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.
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.
"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."
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.
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.
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.
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.
Stocks have rallied so far this year on better-than-expected
first-quarter earnings and expectations that the Fed will be able to
cool inflation without damaging growth and eventually transition to
cutting interest rates.
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A street sign for Wall Street is seen outside the New York Stock
Exchange (NYSE) in New York City, New York, U.S., July 19, 2021.
REUTERS/Andrew Kelly/File Photo
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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 color 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.
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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.
(Reporting by Sinéad Carew, Bansari Mayur Kamdar and Shristi Achar A
in Bengaluru; Additional reporting by Ankika Biswas; Editing by
Sriraj Kalluvila, Devika Syamnath, Pooja Desai and Richard Chang)
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