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  • Writer's pictureThe San Juan Daily Star

Wall Street boasts record closes as inflation data fuels rate-cut bets

The benchmark S&P 500 and the Nasdaq notched record closes on Wednesday, with both advancing more than 1%, after a smaller-than-expected rise in consumer inflation bolstered hopes for interest rate cuts by the Federal Reserve.

The blue-chip Dow also boasted a record closing level and drew closer to the 40,000 milestone. All three of Wall Street’s major indexes hit intraday records.

Tepid U.S. Consumer Price Index (CPI) data for April led traders to raise bets that the Fed will cut its policy rate in September and December.

Retail market order as a percentage of total market volume increased to 17.5% on May 13 from 14.1% on May 1, J.P.Morgan data showed.

Keith Gill, popularly known among traders as “Roaring Kitty”, shared a series of cryptic posts on social media platform X on Sunday following a three-year gap. One of them included a sketch of a man leaning forward in a chair, a popular meme among gamers that indicates things are getting serious.

With colorful YouTube streams and Reddit posts, Gill made the bull case for GameStop in 2021, helping attract a flood of retail cash into the company.

In Gill’s 2021 testimony to Congress, he denied the notion that he used social media to profit by promoting GameStop to unwitting investors.

Meme stocks refer to certain company shares that have been boosted by retail investors using trading platforms and social media investment advice.

It burst into the open during 2021 when the COVID-19 lockdowns boosted savings, policy stimulus put cash into people’s pockets and extremely low interest rates pushed investors to the stock market.

“It’s a relief we didn’t have a fourth hot CPI report,” said Carol Schleif, chief investment officer at the BMO family office in Minneapolis. “Clearly markets liked that the inflation numbers looked softer. Retail sales came in softer. It’s pretty clear evidence that the economy came off the boil and is operating at a more sustainable pace.”

Other data released on Wednesday showed U.S. retail sales were unexpectedly flat in April as higher gasoline prices pulled expenditure away from other goods, indicating that consumer spending was losing momentum.

According to preliminary data, the S&P 500 gained 61.99 points, or 1.18%, to end at 5,308.67 points, while the Nasdaq Composite gained 232.85 points, or 1.41%, to 16,744.03. The Dow Jones Industrial Average rose 357.78 points, or 0.90%, to 39,911.81.

The Nasdaq scored its second record close in as many days.

Equities built on Tuesday’s gains, when Fed Chair Jerome Powell’s assessment of U.S. growth, inflation and the interest rate outlook reassured investors after hotter-than-expected producer prices for April.

Stocks have rallied so far this year on better-than-expected first-quarter earnings and expectations that the Fed will be able to cool inflation without damaging growth and eventually transition to cutting interest rates.

Among megacap stocks, Nvidia, Microsoft and Apple all advanced.

In earnings, Walmart was expected to provide more color on consumer spending when it reports results on Thursday. The retail giant’s shares underperformed.

Retail investor darling GameStop snapped this week’s sharp rally driven by “Roaring Kitty” Keith Gill, a central figure behind the 2021 meme stock frenzy, who posted bullish comments on social media platform X.

Other meme stocks such as AMC Entertainment and Koss Corp also fell.

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