The S&P 500 and Nasdaq Composite cruised to fresh records Wednesday, with investors appearing more confident that interest-rate cuts are on their way.
The broad index logged its sixth straight record close—its longest such streak since 2021—with all 11 of its sectors advancing. The tech-heavy Nasdaq Composite notched its seventh record in a row. The Dow Jones Industrial Average also turned higher, snapping a two-day losing streak.
Major indexes rose as Federal Reserve Chair Jerome Powell spoke to a House committee, after his first day of congressional testimony on Tuesday inched the Fed closer to lowering interest rates. In his testimony this week, Powell pointed to a cooling labor market and suggested that further softening might be unwelcome.
Investors seemed pleased with the signs that lower rates might finally be near at hand. They had entered 2024 thinking the Fed might lower rates some half-dozen times, but were forced to reconsider as inflation remained stubbornly persistent early in the year.
“He’s being consistent with his message that the Fed needs to continue to gain confidence that inflation is trending lower,” said Tracy Bell, chief investment officer of First Horizon Advisors. “But he’s being a little bit on the dovish side in suggesting that they are gaining that confidence, although they’re still remaining very patient.”
Traders and analysts will get more clues on the outlook for rates Thursday, when the consumer-price index for June offers the next big look at inflation.
The S&P 500 rose 1% to end at its 37th record close of the year. The Dow industrials added 1.1%, or about 429 points. It is off 0.7% from its record on May 17. The Nasdaq Composite jumped 1.2%, notching its 27th record close in 2024.
“The market is expressing confidence that the Fed can achieve this soft landing and bring inflation down closer to their 2% target without incurring a recession,” said Hank Smith, head of investment strategy at Haverford Trust. “I think that is a big part of what is driving the market this year.”
Among individual stocks, it was another big day for some of the market’s biggest drivers this year. Shares of chip maker Nvidia added 2.7%, while Apple shares rose 1.9% and Microsoft shares gained 1.5%.
Tesla continued its turnaround after a lengthy spell as a stock-market laggard. Shares of the electric-vehicle maker climbed 0.4% in an 11th consecutive session higher, heading further into positive territory for the year.
Earlier this month, investors learned that Tesla’s vehicle sales had fallen for a second straight quarter, but not as much as expected. That might not sound like cause for a furious rally, but investors were already beginning to reconsider the stock.
On June 24, right before the 11-day climb, Tesla had closed down 27% year-to-date. The shares then logged five sessions higher before the better-than-anticipated results powered them up 10% in a single day. Tesla is now up 5.9% in 2024.
In bond markets, the yield on the benchmark 10-year U.S. Treasury note fell to 4.280%, from 4.297% on Tuesday.
Overseas, stocks were mixed. Japan’s Nikkei 225 gained 0.6% to end at another record, and the Stoxx Europe 600 rose 0.9%. The Shanghai Composite lost 0.7% after data showed China’s consumer inflation remained tepid and factory-gate prices continued to fall.