Stocks rebounded in the past two trading days after declines in three straight sessions. All four main U.S. indexes were modestly higher on Wednesday, with the Nasdaq Composite (NDAQ) leading in choppy trading with a 0.49% increase, followed by Nasdaq-100 (NDX) with a gain of 0.25%, and the S&P 500 (SPX) inching up by 0.16%. The Dow Jones Industrial Average (DJIA) ended the day with a minor loss, weighed down by a slump in energy stocks after the U.S. energy stockpiles unexpectedly increased last week.
The three main indexes rose as NVIDIA (NVDA) reemerged from its three-day profit-taking slump, while other tech giants also rebounded, injecting a fresh dose of optimism into the markets. Thus, Amazon (AMZN) jumped almost 4%, becoming the fifth U.S. company to reach a $2 trillion market cap. Apple (AAPL) and Tesla (TSLA) rose on analysts’ upgrades.
The S&P 500 is up almost 16% this year, on path to lock in a first-half performance far above the historical average. However, futures resumed flashing red on Thursday, as investors are bracing for further turbulence ahead of the Presidential debate scheduled later today, as well as important economic data releases. Tonight’s debate between Donald Trump and Joe Biden is expected to be centered around the economy. On Friday, the release of the crucial PCE data – the Federal Reserve’s preferred measure of inflation – will shed some light on the Fed’s progress in the inflation battle.
Traders are now pricing in one interest-rate cut in December. Still, with some Fed officials opining against policy easing this year, the inflation debate remains at the center of attention. Continued benign inflation data may increase the chances of rate reduction in the next few months and may induce investors to increase rotation from tech mega- and large caps into sectors that have lagged so far this year, such as real estate, materials, and financials.
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