Stock markets rallied on Wednesday, with all major indexes clocking in notable gains. The S&P 500 (SPX) topped 5,600 for the first time, notching its 37th record high this year. The benchmark index rose for the seventh straight trading session, its longest string of daily gains since November. The technology indexes Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) also finished at fresh records after a seven-day rally, while the Dow Jones Industrial Average (DJIA) had its best day since May.
All eleven S&P 500 sectors were in the green on Wednesday, with the rally led by continued strength in technology majors. Semiconductor shares shone as NVIDIA (NVDA) continued to climb higher, while Taiwan Semiconductor Manufacturing (TSM) surged after reporting stronger-than-expected Q2 revenues driven by strong AI chip demand. Strong gains in Apple (AAPL) shares added their support to the markets, as the tech giant surged to record highs on the expected strong increase in iPhone shipments and analysts’ upgrades. Another significant boost arrived from Tesla (TSLA), whose stock rose for the 11th straight session. The EV maker has added more than 40% over this period, increasing its market cap by $250 billion.
Investor sentiment was strongly lifted by Federal Reserve Chair Jerome Powell’s testimony before Congress, which sparked an avalanche of rate-cut bets. Traders are now seeing increased odds of two interest-rated decreases this year, with the first one arriving in September. The central bank’s head said that while labor market conditions remain strong, they have cooled “pretty significantly”. Powell also reiterated that the Fed doesn’t need to see inflation falling below 2% to begin easing policy, but rather a steady progress towards this target in order to gain more confidence that rate cuts are justified.
Powell’s comments put the upcoming consumer inflation data, scheduled to be published later today, squarely in focus. Economists estimate that the CPI eased to 3.1% in June from May’s 3.3% rate, while the Core CPI is expected to remain unchanged at the annual rate of 3.4%. In addition, Friday’s producer price report is also of high importance, as it serves as a forward-looking indicator for next month’s CPI trend.
In another major event, Q2 earnings season kicks off on Friday with the reports of some of the largest U.S. banks coming into the spotlight.
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