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The S&P 500 rose 0.3 per cent, driven largely by gains in tech stocks, even though more stocks fell than rose within the index. The tech-heavy Nasdaq composite rose 0.9 per cent. Both indexes set record highs for the second straight day. The Dow Jones slipped 0.3 per cent.
Apple did the heavy lifting for the broader market. It surged 7.3 per cent after highlighting its push into artificial intelligence technology.
The key events for the market this week come on Wednesday US time with the latest update on inflation at the consumer level and the Federal Reserve interest rate decision. The US will also release its latest update on prices at the wholesale level on Thursday.
Wall Street expects the government’s consumer price index to remain unchanged at 3.4 per cent in May. Inflation as measured by CPI is down sharply from its peak at 9.1 per cent in 2022, but it has seemingly stalled around 3 per cent. That has complicated the Fed’s goal of taming inflation back to its target rate of 2 per cent.
The Fed has held its main interest rate at its highest level in more than two decades and Wall Street is hoping for one or two cuts to that rate this year. Virtually no one expects the Fed to move its main interest rate at its current meeting, which started on Tuesday. Policymakers will be publishing their latest forecasts on Wednesday for where they see interest rates and the economy heading.
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When Fed officials released their last projections in March, they indicated the typical member foresaw roughly three cuts to interest rates in 2024. That projection will almost certainly fall this time around.
Data on the US economy have come in mixed recently, and traders are hoping for a slowdown that stops short of a recession and is just right in magnitude. A cooldown would put less upward pressure on inflation, which could encourage the Fed to cut rates. Lower interest rates could fuel more growth for the broader stock market. Major indexes have been rallying to records, though, despite worries about sticky inflation and high interest rates.
The world’s largest economy has remained resilient with support from a strong jobs market and consumer spending. Consumers are becoming increasingly stressed, especially those with lower incomes, and retailers have been warning investors about the potential impact to earnings and revenue. The US jobs market has been showing some signs of cooling, which could ease inflation but put more stress on consumers.
“With strong labour market readings, inflation data will be even more important in the months to come,” said Kristy Akullian, head of iShares Investment Strategy Americas.
Paramount Global, the media company that owns the Paramount movie studio, CBS as well as several cable networks, dropped 7.8 per cent following reports that talks to merge the company with Skydance Media had fallen apart.
Treasury yields fell in the bond market. The yield on the 10-year Treasury slipped to 4.40 per cent from 4.47 per cent late Monday.
With AP
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
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