Wall Street experienced a significant surge on Wednesday as the S&P 500 index reached a new all-time high, buoyed by anticipation surrounding upcoming inflation data. The index approached the 5,800 mark, marking its 44th record in 2024. The rally was particularly driven by strong performances in technology stocks, with Apple Inc. leading the charge, rising by 1.7%.
Despite a mixed performance from major tech companies, overall sentiment remained optimistic. Nvidia Corp. ended a five-day rally, while Tesla Inc. experienced a slight dip as it prepares for its much-anticipated Robotaxi launch. Alphabet Inc. fell by 1.5% amid news that the U.S. government is considering a breakup in a landmark antitrust case involving Google.
Investors expressed confidence in the tech sector, with Solita Marcelli, Chief Investment Officer for Americas at UBS Global Wealth Management, stating that recent volatility could present a buying opportunity, particularly in artificial intelligence-related stocks.
The S&P 500 rose by 0.7%, with the Nasdaq 100 up 0.8% and the Dow Jones Industrial Average climbing 1%. In contrast, Treasuries saw a retreat, while the dollar marked its longest winning streak in over two years, advancing by 0.4% on the Bloomberg Dollar Spot Index.
Looking ahead, U.S. inflation is expected to moderate as the third quarter concludes. The consumer price index (CPI) is projected to show a rise of just 0.1% for September, representing the smallest increase in three months. On a year-over-year basis, the CPI is anticipated to rise by 2.3%, the slowest pace since early 2021. The core CPI, excluding food and energy, is forecasted to increase by 0.2% month-on-month and 3.2% year-on-year.
Market analysts noted that the Federal Reserve’s shift in focus from inflation to labor market conditions could reduce the market impact of upcoming CPI reports. Matthew Weller from Forex.com and City Index commented that while this trend may lessen the volatility associated with inflation data, the forthcoming CPI report could still significantly influence market sentiment, especially following a robust jobs report from the previous Friday.
Investor sentiment remains cautiously optimistic, with a survey indicating that 42% of respondents expect a mixed or negligible market reaction to the CPI data. Meanwhile, 32% anticipate a risk-off sentiment, while only 25% foresee a risk-on approach.
For continued bullish momentum, experts emphasize the need for sustained moderation in inflation, a stable economic environment, and robust earnings growth from corporate America. Ed Clissold of Ned Davis Research highlighted that large-cap and growth stocks typically outperform during the third year of a bull market, although current valuations appear stretched relative to small-cap and value stocks.
In corporate news, Tesla reported its best-ever quarter for shipments in China, with deliveries from its Shanghai factory rising for the third consecutive month. Taiwan Semiconductor Manufacturing Co. exceeded expectations with a 39% increase in quarterly revenue, alleviating concerns over a potential slowdown in AI hardware spending.
On the M&A front, Rio Tinto Group announced a $6.7 billion acquisition of Arcadium Lithium Plc, marking its largest deal in 17 years as it seeks to enhance its position in the battery metals market.
Key Market Movements:
Stocks:
- S&P 500: +0.7%
- Nasdaq 100: +0.8%
- Dow Jones: +1%
Bonds:
- 10-Year Treasury Yield: 4.06%
Currencies:
- Dollar Index: +0.4%
- Euro: -0.4% to $1.0939
- British Pound: -0.3% to $1.3065
- Japanese Yen: -0.8% to 149.32 per dollar
Cryptocurrencies:
- Bitcoin: -2.2% to $60,966.50
- Ether: -1.1% to $2,415.64
Commodities:
- WTI Crude: -0.2% to $73.44 per barrel
- Gold: -0.5% to $2,609.26 per ounce
Upcoming Events:
- U.S. CPI and initial jobless claims report due Thursday.
- Earnings season kicks off with JPMorgan and Wells Fargo on Friday.
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