Wall Street roars again to record highs as rate-cut hopes flourish, chipmakers rally
Wall Street’s three major stock indexes on Thursday registered record closing highs for the second day in a row after the Federal Reserve reassured investors about the prospects for rate cuts this year while chip stocks rallied after Micron Technology’s upbeat forecast.
The Dow Jones Industrial Average climbed 269.24 points, or 0.7%, to 39,781.37, while the S&P 500 gained 0.2% and the Nasdaq advanced 0.3%.
The three major indexes hit fresh intra-day record highs and the Dow neared its 40,000 level milestone.
Chipmaker Micron Technology jumped 14% to a record high after posting a surprise quarterly profit and forecasting third-quarter revenue above estimates.
Peer Nvidia added 1%, while the Philadelphia Semiconductor index advanced 2.9%.
Stock indexes had closed higher on Wednesday after central bankers kept borrowing costs unchanged and indicated they still expect to ease interest rates by three-quarters of a percentage point by the end of 2024.
“Earnings results are keeping semiconductors as market leaders but more broadly a risk on mode has stemmed from the dovish Fed on Wednesday,” said Matthew Miskin, Co-Chief Investment Strategist at John Hancock Investment Management.
Fed Chair Jerome Powell said in a press conference after the policy meeting on Wednesday that inflation reports “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%.”
But John Hancock’s Miskin questioned whether the Fed is being overly optimistic about inflation and rate cuts.
“They’re opening to door to let inflation risk seep back into the market. It’s not there yet but it’s a risk that could come later this year,” he said.
The CME FedWatch tool showed the market is now pricing in a 70% chance of a Fed rate cut in June, compared with around 56% estimated at the beginning of the week.
UBS Global Research said that it now expects the first cut in June, compared with its prior forecast of a cut in May.
In the meantime, however, economic data released earlier on Thursday was adding to investors’ bullish moods.
A separate reading showed flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, came in at 52.2 this month versus 52.5 in February.
Most rate-sensitive megacap growth and technology stocks also advanced.
Apple, however, slid 4% after the Justice Department sued the company for allegedly violating antitrust laws.
IT services provider Accenture fell 9% after it cut its fiscal-year 2024 revenue forecast, as an uncertain economy prompts clients to cut spending on its consulting services.
Broadcom gained 5.6% as TD Cowen upgraded its rating to “outperform.”
Reddit’s shares jumped 48% on the New York Stock Exchange under the ticker ‘RDDT’ after the social media platform priced its initial public offering at the top end of its targeted range of $31 to $34 per share.
