NEW YORK (`) — U.S. stocks rose to record levels Tuesday, led again by technology companies, as some of Wall Street's most influential firms regained momentum.
The S&P 500 rose 1.1%, surpassing its all-time high set last week. The Dow Jones Industrial Average rose 235 points, or 0.6%, and the Nasdaq Composite rose 1.5%.
All three indexes began the day with losses after a highly anticipated inflation report said U.S. consumers paid slightly higher prices last month than economists expected. The worse-than-expected data dashed hopes that the Federal Reserve could push through long-awaited interest rate cuts at its meeting next week.
But inflation numbers were still close to expectations and traders held on to hopes that the longer-term downtrend means the Fed will begin making hoped-for rate cuts in June. This helped stock indices pare their losses during the day.
Additionally, inflation may not actually be as high as the morning report suggested.
“January and February are notoriously noisy months for a lot of economic data,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“The Fed had no plans to cut rates next week and this report does not change that. The discussion at the table will be more about the longer-term trend.”
There are fears that “stubborn” inflation that refuses to go down will force the Fed to keep interest rates high, negatively impacting the economy and investment prices. The Fed's key interest rate is already at its highest level since 2001.
“Another hotter-than-expected CPI reading could breathe new life into the stubborn inflation narrative, but whether it will actually delay rate cuts is a different story,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.
For months, traders on Wall Street have been trying to get ahead of the Federal Reserve and estimate when interest rate cuts will occur. In anticipation of this, they have already pushed up stock prices and pushed down bond yields.
Despite all this, the Fed has “been nothing but consistent in doing what it said it would do,” Larkin said. “Unless they say otherwise, they plan to cut rates in the second half of the year.”
However, the financial markets' immediate reaction to the inflation data was hesitant and uncertain.
In the bond market, government bond yields initially fell and then rose again. The yield on the 10-year Treasury note finally rose to 4.15% from 4.10% late Monday.
The price of gold, which has shot to record levels on expectations of upcoming interest rate cuts, also fluctuated. An ounce for delivery in April ended up falling $22.50, closing at $2,166.10. Meanwhile, jitters among U.S. stock investors eased by more than 8% after bouncing up and down a few times.
On Wall Street, big technology stocks made the biggest contribution to the market upswing. Oracle rose 11.7% after reporting higher profit than analysts expected for its latest quarter.
Nvidia also rose 7.2%, recovering from a rare two-day plunge. The hype surrounding artificial intelligence technology on Wall Street has caused the company's shares to surge, making it one of the most influential in the market. It was the single strongest force pushing the S&P 500 higher on Tuesday.
New York Community Bancorp rose 5.8% after it said it completed its previously announced deal to raise about $1.05 billion in cash through the sale of shares. The bank struggled under the weight of falling commercial real estate prices and growth difficulties associated with previous acquisitions. Its problems have also raised concerns about the broader regional banking industry.
3M rose 5% after announcing that Bill Brown, the former chairman and CEO of L3Harris Technologies, will take over as CEO in early May.
On the losing side on Wall Street was Southwest Airlines. It fell 14.9% after it cut its forecast for a key revenue measure in the first three months of this year, partly because flight numbers for some leisure travelers fell short of expectations.
Boeing also said it would deliver fewer planes than expected this year. Shares of Boeing, which has been criticized for its safety and manufacturing quality, fell 4.3%.
Overall, the S&P rose 57.33 points to 5,175.27. The Dow climbed 235.83 to 39,005.49 and the Nasdaq gained 246.36 to 16,256.64.
In overseas stock markets, Japan's Nikkei 225 fell 0.1%, falling further from recent records. Expectations are growing that the central bank will raise interest rates that are below zero.
Indices rose 3.1% in Hong Kong, 1.2% in Frankfurt and 1% in London, but performance was more modest elsewhere in Asia and Europe.
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` business reporters Elaine Kurtenbach and Matt Ott contributed.
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