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  • Writer's pictureThe San Juan Daily Star

Wall Street hits record closing highs on rate-cut optimism; chipmakers rally

Wall Street’s three major stock indexes on Thursday registered record closing highs for the second day in a row after the Federal Reserve reassured investors about the prospects for rate cuts this year while chip stocks rallied after Micron Technology’s upbeat forecast.

Shares in Micron Technology rallied sharply after hitting an all-time high following a surprise quarterly profit and its forecast of third-quarter revenue above estimates.

Broadcom also climbed rapidly after TD Cowen upgraded its rating of the stock to “outperform”. Shares in Nvidia were also a big boost while the Philadelphia Semiconductor index rallied.

U.S. stock indexes had boasted record closing levels on Wednesday after U.S. central bankers kept borrowing costs unchanged and indicated they still expect to ease interest rates by three-quarters of a percentage point by the end of 2024.

“Earnings results are keeping semiconductors as market leaders but more broadly a risk on mode has stemmed from the dovish Fed on Wednesday,” said Matthew Miskin, Co-Chief Investment Strategist at John Hancock Investment Management.

Fed Chair Jerome Powell said in a press conference after the policy meeting on Wednesday that inflation reports “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%.”

But John Hancock’s Miskin questioned whether the Fed is being overly optimistic about inflation and rate cuts.

“They’re opening to door to let inflation risk seep back into the market. It’s not there yet but it’s a risk that could come later this year,” he said.

In the meantime, however, economic data released earlier on Thursday was adding to investors’ bullish moods.

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, while sales of previously owned homes increased by the most in a year in February, signs the economy remained on solid footing in the first quarter.

“This economy continues to defy expectations and markets are loving every minute of it,” said Miskin.

According to preliminary data, the S&P 500 gained 16.37 points, or 0.31%, to end at 5,240.99 points, while the Nasdaq Composite gained 30.65 points, or 0.19%, to 16,400.05. The Dow Jones Industrial Average rose 266.62 points, or 0.67%, to 39,778.75.

The three major indexes hit fresh intra-day record highs and the Dow neared its 40,000 level milestone.

Apple bucked the market trend however with a sharp decline after the U.S. Department of Justice sued the iPhone maker, the first major antitrust effort against the company by the Biden administration, alleging it monopolized smartphone markets.

Shares in IT services provider Accenture tumbled after it cut its fiscal-year 2024 revenue forecast, with economic uncertainty prompting its clients to cut consulting services spending.

Reddit shares started trading on the New York Stock Exchange at $47, which was 38% higher than its initial public offer price of $34.

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