Record Highs for S&P 500 and Nasdaq Amid Fed Easing Expectations

Overview

On Wednesday, the S&P 500 and Nasdaq indexes closed at record highs, driven primarily by technology stocks. The market's optimism was fueled by economic data that supports the anticipated start of the Federal Reserve's policy easing cycle.

Sector Performance

Leading Sectors

Technology stocks spearheaded the gains among the 11 S&P 500 sectors. The communications and industrial sectors also performed strongly.

Lagging Sectors

Consumer staples stocks experienced the most significant losses, underperforming other sectors.

Economic Data and Fed Policy

The latest economic indicators suggest a softening labor market, which might prompt the Federal Reserve to cut rates this year. A private payrolls report for May indicated easing labor market tightness, following Tuesday's data showing job openings had decreased to their lowest in over three years.

Jack Janasiewicz, a portfolio manager at Natixis Investment Managers Solutions in Boston, commented, "The economic data is starting to ease up a bit, which reduces pressure on rates. This, combined with weaker economic data, creates a favorable scenario for the bond market."

Market Predictions

According to the CME's FedWatch tool, traders now see a nearly 69% chance of a rate reduction by September, a notable increase from last week's 50%.

Treasury Yields and Market Indexes

U.S. 10-year Treasury yields fell to a two-month low on Wednesday, influenced by expectations of weaker job growth ahead of Friday’s government employment report for May.

Major Index Performances

• Dow Jones Industrial Average: Rose 96.04 points (0.25%) to 38,807.33.
• S&P 500: Increased by 62.69 points (1.18%) to 5,354.03.
• Nasdaq Composite: Climbed 330.86 points (1.96%) to 17,187.91.

Previously, the S&P 500's record-high close was 5,321.41 on May 21, and the Nasdaq's was 17,019.88 on May 28.

Notable Stock Movements

Chip Stocks

Chip stocks surged 4.5%, with Nvidia and Taiwan Semiconductor Manufacturing leading the rally. Nvidia's market valuation hit $3 trillion for the first time, surpassing Apple to become the world's second-most valuable company.

Other Major Movers

• Hewlett Packard Enterprise: Rose 10.7% following an optimistic third-quarter revenue forecast driven by strong demand for AI servers.
• Dollar Tree: Dropped 4.9% after a weak quarterly profit forecast and announced it would explore strategic options for Family Dollar.
• Intel: Gained 2.5% after Apollo Global Management agreed to purchase a 49% equity interest in a joint venture involving Intel's Ireland manufacturing unit.
• CrowdStrike Holdings: Jumped 11.9% after forecasting second-quarter revenue above estimates.

Market Breadth

On the NYSE, advancing issues outnumbered decliners by a 2.39-to-1 ratio. The Nasdaq saw 2,759 stocks rise and 1,492 fall, with advancing issues outnumbering decliners by a 1.85-to-1 ratio.

• S&P 500: Recorded 24 new 52-week highs and 9 new lows.
• Nasdaq Composite: Recorded 62 new highs and 116 new lows.

Trading Volume

The total volume of shares traded across U.S. exchanges was approximately 10.8 billion, compared with the 12.6 billion average over the last 20 trading days.