Wall Street rally hits record high

The S&P 500 rose 1.2%, surpassing its all-time high set a month and a half ago. The Nasdaq Composite Index rose 1.4%, matching its own record set the previous day, and the Dow Jones Industrial Average rose 349 points, or 0.9%, breaking its all-time high set in March.

Relief also came in the bond market, with lower U.S. Treasury yields easing some of the pressure on stock markets. The move came as traders increasingly expected the U.S. Federal Reserve to actually cut its key interest rates this year.

Stocks that tend to benefit most from lower interest rates led the market. Real estate stocks in the S&P 500 rose 1.7%, while stocks of power companies and other utilities rose 1.4%. The lower a bond’s interest payments are, the better the dividends it pays will look to investors.

Homebuilders were doing well on hopes that the Federal Reserve’s interest rate cuts would ease mortgage rates, with shares in Lennar, DR Horton and Pulto Group all up more than 5%. Big Tech and other high-growth stocks also rode the wave of lower interest rate expectations, with Nvidia’s 3.6% rise being the strongest force pushing the S&P 500 higher.

This optimism is fueled by a report showing that the prices U.S. consumers had to pay for gasoline, car insurance, and everything else in April were 3.4% higher overall compared to the same month a year earlier. It comes from. This is painful, but not as bad as March’s inflation rate of 3.5%.

Perhaps more importantly, the economic slowdown was a relief, as Consumer Price Index (CPI) reports earlier this year were consistently lower than expected. The disappointing set of indicators ended expectations that the U.S. Federal Reserve would soon cut its key interest rates.

The federal funds rate is at its highest level in more than 20 years, and a cut would reduce investment prices and take some of the downward pressure off the economy.

Alexandra Wilson Elizondo, co-chief investment officer of Goldman Sachs Asset Management’s multi-asset solutions business, said: “Today’s CPI data shows signs of derailment due to a simple delay in eliminating inflation over the past three months. There were a lot of lies to prove that he didn’t do it.” .

Spending at U.S. retailers in April did not grow from March, according to a separate report. This was weaker than the 0.4% growth expected by economists.

Slower growth in retail sales could be seen as a positive for the market as it could reduce upward pressure on inflation. But the slowdown has also raised concerns that cracks are appearing in U.S. consumer spending, one of the main pillars protecting the economy from recession. Pressures on low-income households are particularly high.

Brian Jacobsen said: “We hope consumer momentum hasn’t slowed down, but given the spending of savings due to the pandemic, rising delinquencies, slowing wage growth, and now flat retail sales.” “We cannot rule out the possibility of a sharper economic slowdown.” Chief Economist at Annex Wealth Management.

This could threaten one of the key hopes that has lifted the U.S. stock market toward a record. The Federal Reserve can strike a balance through high interest rates that slow the economy enough to eradicate high inflation, but not enough to cause negative effects. recession.

Meanwhile, another discouraging report released this morning said New York state manufacturing is shrinking more than expected.

On Wall Street, Petco Health + Wellness led the market, surging 27.9%. Glenn Murphy, CEO of investment firm FIS Holdings, has been appointed executive chairman.

The losers were GameStop and AMC Entertainment, which reversed momentum after an incredible start to the week. GameStop is down 18.9%, but is still up 126.5% for the week so far.

AMC Entertainment fell 20% after announcing it would issue about 23.3 million shares to erase $163.9 million in debt.

Overall, the S&P 500 rose 61.47 points to 5,308.15. The Dow rose $349.89 to $39,908.00, and the Nasdaq rose $231.21 to $16,742.39.

In the bond market, the yield on the 10-year U.S. Treasury note fell to 4.34% from 4.45% late Tuesday. The two-year Treasury yield was more closely tied to expectations for Fed action, falling to 4.72% from 4.82%.

Traders now expect a nearly 95% chance that the Fed will cut key interest rates at least once this year, according to CME Group data. This is up from just under 90% the day before.

In overseas stock markets, Shanghai stocks fell 0.8% after the People’s Bank of China left its main lending rate unchanged. The index was mixed elsewhere in Asia, but rose slightly in Europe.