Stocks rallied on Wednesday, with the S&P 500 (SPX), the Dow Jones Industrial Average (DJIA), the Nasdaq Composite (NDAQ), and Nasdaq-100 (NDX) all reaching all-time highs. The SPX registered its 23rd record close since the beginning of the year.
The renewed bullishness was sparked by a benign CPI report that showed a lower-than-expected monthly price increase, while year-on-year inflation was in line with estimates. The Core CPI (excluding the volatile energy and food prices) eased to its lowest year-on-year reading since April 2021. The deceleration of price increases is a welcome change after the CPI reports in the prior three months were hotter than expected.
Coupled with the flat month-on-month retail sales reading, the data ignited speculations that the economy is cooling, elevating chances for the Fed to cut rates in the next few months. Traders are increasingly betting on the first interest-rate decrease in September, a turnaround from just a month ago when many market participants expected no cuts at all this year.
All but one S&P 500 sector rose, with the rate-sensitive Information Technology and Real Estate leading the way. In tech, the best performers were semiconductor stocks. Nvidia (NVDA), Broadcom (AVGO), and AMD (AMD) rose strongly on prospects of easier monetary policy ahead. Wednesday’s best-performing stock was the AI-server maker Super Micro Computer (SMCI), which jumped almost 16%. Another clear winner was Dell (DELL), surging over 11% on the day as Morgan Stanley analysts lifted the price target on the stock, citing strong demand for AI server storage solutions.
Some important economic data points are scheduled to be published next week, including the PMI reports and the consumer sentiment index. However, most of the investor attention will be focused on Nvidia’s fiscal Q1 2025 earnings report, scheduled to be released on May 22nd. If the AI darling meets the extremely high analysts’ expectations, it could add more steam to the stock rally.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
