Market Update: Nasdaq and S&P Reach All-Time Highs Following CPI; Federal Reserve Anticipates One Rate Cut in 2024

U.S. Market Update: Stocks Hit Record Highs on Inflation Data and Fed Forecast

The U.S. stock market saw a rise on Wednesday, with both the Nasdaq and S&P 500 reaching record highs. This came after the release of data that showed inflation slowing in May and the Federal Reserve hinting at a possible interest rate cut before the end of the year.

Nasdaq and S&P 500 Reach New Highs

The Nasdaq Composite went up by 1.5%, while the S&P 500 gained 0.9%. However, the Dow Jones Industrial Average, which has fewer tech stocks, experienced a slight decline of 0.1% during the trading session.

Inflation Slows Down

The Consumer Price Index revealed that inflation had cooled more than anticipated in May. Headline inflation was at 3.3%, slightly lower than the expected 3.4%. Core inflation, which excludes volatile food and energy prices, decelerated to an annual rate of 3.4% from 3.6% in April.

Federal Reserve’s Decision

The Federal Reserve decided to keep interest rates unchanged for the seventh consecutive meeting. Additionally, the Fed officials shared their economic projections, including the dot plot, which indicated that one interest rate cut might be expected by the end of the year.

Market Reaction

Following the Fed's announcement, Treasury yields inched up, although they remained significantly lower for the day after dropping to a 3-month low earlier in response to the inflation report.

Stock Highlights

Apple came close to overtaking Microsoft as the world's most valuable company as it reached a record high for the second day in a row. This surge came after the announcement of "Apple Intelligence," the company's custom AI system.

Oracle also saw a jump in its stock price, reaching a record high. This increase followed the announcement of significant AI deals with Microsoft, OpenAI, and Google Cloud, which helped offset the cloud software provider’s quarterly earnings miss.

Market Wrap-Up

Despite a mostly downward trend in U.S. stocks the previous day, both the S&P 500 and Nasdaq Composite managed to close at record highs. This was largely attributed to Apple's AI-powered rally.

The U.S. stock market remains optimistic in light of inflation data and the Federal Reserve's forecast. Investors are closely monitoring developments to see how these factors will continue to influence the market in the coming weeks and months.