S&P and Nasdaq Set New Highs Despite a Firmer View on Rates

Expectations on the timing of the Federal Reserve’s interest rate decreases were influenced by inflation data and remarks made by policymakers, and the tech stocks associated with artificial intelligence helped drive gains on the S&P 500 and Nasdaq on Thursday.
As smaller rival rose Micro Devices soared, heavyweight chipmaker Nvidia rose, providing the largest lift to the benchmark S&P index and Nasdaq. In recent months, Wall Street has rallied around these and other technology businesses due to excitement about the development potential of artificial intelligence.

Following the bell, Dell Technologies, a vendor of AI-optimized servers built with high-end Nvidia processors, outperformed its report.

According to CME’s FedWatch Tool, traders increased their bets that the Fed will lower rates in June after a Commerce Department data revealed that annual inflation was at its lowest point in three years and that U.S. prices increased in January in line with expectations despite sharp increases in service costs.

“There’s no real reason for the market to expect the Fed to get more hawkish than they already outlined,” stated Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky. “Without kind of a hawkish surprise here, which it wasn’t, it was soft or at least in line.”

“It makes no difference what you believe they ought to do. They have followed through on their promises, and the market has once again been forced to align with the Fed’s predicted position.”

Preliminary data shows that the Nasdaq Composite ended the day up 144.19 points, or 0.90%, to 16,091.93, while the S&P 500 gained 27.78 points, or 0.51%, to close at 5,095.78 points. At 38,973.09, the Dow Jones Industrial Average increased by 24.07 points, or 0.07%.

For February, all three of the major indexes saw gains, marking their fourth consecutive month of increases.

Raphael Bostic, president of the Atlanta Fed and voting member, emphasized the importance of adopting a data-dependent approach to monetary policy. He predicted that the road to the Fed’s 2% inflation target would be rocky and reiterated his belief that rate cuts will occur “in the summer months.”

President of the Chicago Federal Reserve Bank Austan Goolsbee indicated that he continues to favor rate decreases later this year, citing advancements in the labor market and the supply of goods made last year as the reason for this year’s declines in inflation.

Due to reports on persistent inflation from producer and consumer prices earlier in February, investors reduced their expectations of rate decreases until June. Traders believed that March would mark the beginning of the Fed’s easing cycle at the beginning of this year.

Economists surveyed by Reuters said that first unemployment claims for the week ending on February 24 were 215,000, higher than expected at 210,000.

The Dow’s gains were restrained, partly due to a decline in Boeing following the release of a Department of Justice investigation report.

After announcing that CEO Frank Slootman would be retiring and predicting first-quarter product revenue below Wall Street projections, Snowflake’s stock fell.

Following the media conglomerate’s unexpected earnings on streaming increases, Paramount Global saw a surge.

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