The S&P 500 and Nasdaq closed at record highs for the third straight day on Wednesday, following softer-than-expected inflation data. However, both indexes ended the day off their intraday peaks after the Federal Reserve projected only one interest rate cut for this year.
Fed Maintains Policy Rate Amid Revised Projections
The Federal Reserve concluded its June 11-12 meeting with a statement confirming that it left its policy rate unchanged, as widely anticipated. Despite the initial positive market reaction to the Labor Department’s report showing the U.S. Consumer Price Index (CPI) was unchanged in May, market volatility ensued following the Fed’s announcements and Chair Jerome Powell’s press conference. The Fed’s updated projections now include only one quarter-percentage-point rate reduction for 2024, down from the three cuts forecasted in March.
S&P 500 and Nasdaq Response and Sector Performance
Stocks experienced choppy trading post-Fed announcement, with the S&P 500 and Nasdaq paring earlier gains, while the Dow Jones Industrial Average closed near flat. The S&P 500 rose 45.71 points, or 0.85%, to 5,421.03, and the Nasdaq Composite advanced 264.89 points, or 1.53%, to 17,608.44. Conversely, the Dow Jones Industrial Average fell 35.21 points, or 0.09%, to 38,712.21.
Inflation Data Spurs Optimism
The market opened higher on Wednesday, buoyed by the Labor Department’s CPI report, which showed no change in May due to decreased gasoline prices. “The CPI number was certainly cooler than estimates and drove optimism to start the day but that was only half of today’s menu,” remarked Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Investor Sentiment and Trading Volume
James noted that he would have expected a weaker market close following the Fed’s update, observing that “the commentary was hawkish and rate cut (expectations) were trimmed from three to one.” Nevertheless, some stocks provided support to the market; Oracle shares surged 13.3% after forecasting double-digit revenue growth for fiscal 2025, contributing to the overall positive sentiment.
Major Movers and Market Breadth
Apple shares climbed 2.9%, continuing the previous day’s strong gains, temporarily reclaiming its status as the world’s most valuable company, surpassing Microsoft. Trading volume on U.S. exchanges totaled 11.80 billion shares, slightly below the 20-day average of 12.74 billion. Advancing issues outnumbered decliners on the NYSE by a 2.86-to-1 ratio, and on the Nasdaq, by a 1.78-to-1 ratio.
The S&P 500 recorded 39 new 52-week highs and two new lows, while the Nasdaq Composite saw 99 new highs and 80 new lows.
Also Read: Live Nation Discovers Unauthorized Access to Ticketmaster Data
