Wall Street’s benchmark S&P 500 index rose on Wednesday and a rally in tech stocks lifted the Nasdaq above the 20,000-point milestone for the first time, after a U.S. inflation report boosted expectations of a Federal Reserve interest rate cut.
The Dow Jones Industrial Average dipped, dragged by health insurers as U.S. lawmakers introduced a bill seen as crimping their profits.
A Labor Department report showed U.S. consumer prices in November increased by the most in seven months, though broadly in line with market expectations.
According to preliminary data, the S&P 500 gained 49.21 points, or 0.82%, to end at 6,084.12 points, while the Nasdaq Composite gained 347.66 points, or 1.77%, to 20,034.90. The Dow Jones Industrial Average fell 94.48 points, or 0.21%, to 44,153.35.
“Nasdaq is rallying on the prospect of a rate cut next week and has room to move higher,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Markets are pricing in more than a 96% chance the Fed will cut rates by 25 basis points next week, up from an 86% chance before the data, according to CME’s FedWatch Tool. Bets had risen following Friday’s employment report, which showed an uptick in unemployment alongside a surge in job growth.
A Nasdaq 100 inclusion could spur more gains for MicroStrategy, whose bitcoin holding was valued at about $42 billion, as more investment firms include the stock in their portfolios to accurately reflect the index composition.
For an entry into the index, a stock listed on the Nasdaq exchange must rank among the top 100 by market value, have a minimum daily trading volume of 200,000 shares and not be in the financial sector. The reshuffle announcement is due on Friday after market close.
The yield on benchmark U.S. 10-year notes rose 5.2 basis points to 4.267%.
“The equity market seems to be breathing a sigh of relief that this is another steady-as-she-goes report,” said Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey. “There’s no surprises. It seems the equity market was braced for a higher than expected number.”
Tesla shares climbed to a record high as the electric vehicle maker extended a rally in the wake of the U.S. presidential election.
Nvidia and other megacap growth stocks, including Alphabet and Amazon, also finished higher.
Pharmacy benefit managers, including Cigna, CVS Health, and UnitedHealth Group, lost ground after a bipartisan group of lawmakers introduced a bill that would force health insurers or drug middlemen to divest their pharmacy businesses.
GameStop gained after the videogame retailer reported a profit for the third quarter on cost-saving efforts.
Broadcom jumped following a report that Apple is working with the company to develop its first server chip specially designed for artificial intelligence.
Macy’s shed after the department-store bellwether cut its annual profit forecast as persistent weakness in demand clouded its expectations for the holiday shopping season.
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