NEW YORK: US stocks rose broadly on Wednesday, with the S&P 500 and the Nasdaq touching fresh record highs after softer inflation data lifted hopes for central bank rate cuts, while Apple overtook Microsoft to become the world’s most valuable company.
As the focus shifts to the Federal Reserve’s policy announcement , markets will zero in on Chair Jerome Powell’s press conference and the Fed’s updated “dot plot”, which shows where policymakers expect interest rates to stand this year and long term.
Interest rates are overwhelmingly expected to remain unchanged at the meeting.
Meanwhile, Apple’s shares climbed 4.4% to hit a record high, dethroning Microsoft for the first time in five months, as the iPhone maker’s market valuation rose to $3.24 trillion versus Microsoft’s $3.23 trillion.
The latest spurt came soon after Apple launched its artificial intelligence-integrated products on Monday, sprinting past AI chip powerhouse Nvidia’s $3 trillion valuation.
Risk sentiment was boosted after a Labor Department report showed the Consumer Price Index was unchanged on a monthly basis in May, when it was expected to rise 0.1%. On an annual basis, inflation rose 3.3%, lower than economists’ expectation of a 3.4% increase.
CPI, excluding volatile food and energy prices, rose 0.2%, compared with an expectation of a 0.3% rise, while core inflation rose 3.4% on an annual basis versus a forecast of 3.5%.
“This continues the process of inflation slowly coming down. The $64,000 question is, going forward, how quickly it will keep coming down,” said Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute.
Markets boosted expectations for a September start to rate cuts after the data, pricing in an over 70% chance, according to the CME’s FedWatch tool, from 54% prior to the report.
“It still comes down to when the cuts start and how many times they (the Fed) will cut, and in our opinion, the market’s probably being too exuberant,” Samana said.
Rate-sensitive megacap stocks rose as Treasury yields fell, with the S&P 500’s information technology and an index tracking chip stocks at all-time highs.
Real-estate stocks rose to an over three-week high, while the small-cap Russell 2000 Index jumped 2.7%.
At 12:04 p.m. ET, the Dow Jones Industrial Average was up 106.95 points, or 0.28%, at 38,854.37, the S&P 500 was up 59.77 points, or 1.11%, at 5,435.09, and the Nasdaq Composite was up 302.32 points, or 1.74%, at 17,645.87.
Among others, Oracle gained 11.7% after forecasting double-digit revenue in fiscal year 2025 after the bell on Tuesday.
US-listed shares of electric-vehicle maker Nio slipped 0.8% after the European Commission announced extra tariffs on imported Chinese EVS.