S&P 500 Jumped 0.8% To Cross 5,400 Mark On Wednesday

The S&P 500 experienced a gain on the third consecutive day, Wednesday, after the Federal Reserve’s latest policy announcement and the May inflation data release. It jumped 0.8% to close above the 5,400, reaching a record high. Nasdaq also gained 1.5% and settled close by 18,000. Meanwhile, the Dow Jones ended with modest losses. It is worth noting that Tesla and Nvidia soared over 3.5% each, and Oracle Corp. surged 13%, leading to major gains. Meanwhile, the 10-year treasury yield experienced a huge drop by 9 base points, settling at 4.32%.

Expectedly, the US Federal Reserve didn’t change the interest rates but saw moderate advancements toward the 2% inflation goal. According to its projection, the central bank will cut interest rates only once for the rest of the year. Federal Reserve officials anticipate more cuts for 2025. 

The Dow Jones anticipated a 0.1% month-on-month growth, but the CPI (Consumer Price Index) remained unchanged in May. The gauge was estimated to increase by 3.4% year-on-year (YoY), but that was also slow and grew by 3.3%. The monthly and yearly numbers for core CIP, excluding volatile prices, were also lower than estimated.

Michael Gapen, the managing director of Bank of America Corp, retained his view of 3.50% to 3.75% on the first rate cut in December. He said, “ Don’t put the cut before the horse.” Michael added, “ This Fed will be reactionary and will ease when the inflation data allows it.

Krishna Guha, the vice chairman of Evercore ISI, is preparing for the September cut. However, it’s only possible if the May downshift remains the same for a few more months. He said, “Powell’s presser fine-tunes to a 1.5 cut signal — we still see thin baseline of two.

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