The wider market index jumped 0.85%, ending at 5,421.03, while the Nasdaq Composite added 1.53%, closing at 17,608.44
The S&P 500 climbed to a record and closed above 5,400 for the first time Wednesday after the Fed’s latest policy announcement and May inflation data pointed to easing pricing pressures.
The wider market index jumped 0.85%, ending at 5,421.03, while the Nasdaq Composite added 1.53%, closing at 17,608.44. Both the S&P 500 and Nasdaq reached all-time peaks and ended at records on Wednesday. The Dow Jones Industrial Average slid 0.09%, or 35.21 points, to close at 38,712.21.
The Federal Reserve kept interest rates unchanged, as was widely expected. The central bank also indicated progress on the inflation front, saying, “In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.”
Nonetheless, the Federal Reserve’s latest projections, also released Wednesday, showed the central bank only sees one rate cut taking place this year. That is down from three expected rate cuts in early 2024.
Wednesday’s announcement followed the release of new U.S. inflation data, which appeared to indicate a cooling trend.
The CPI was unchanged for the month of May, lower than the Dow Jones estimate for a 0.1% monthly rise. Year over year, the inflation metric rose 3.3%, which also came in below expectations and represented a slowing from the previous 3.4% pace. Monthly and yearly numbers for core consumer price index, which excludes the volatile prices associated with energy and food, were also lower than expected.
The CPI neutralised the hawkish Fed, said Jay Hatfield, founder of InfraCap. Most market participants believe the economy is slowing, and they are going to have to trim rates. So that is why we think the market was shrugging off this really hawkish of just one cut.
