Traders work on the floor at the New York Stock Exchange in New York City, June 3, 2024.
(Reuters) — The S&P 500 and the Nasdaq jumped to record highs on Wednesday after softer inflation data lifted hopes for a rate cut by the Federal Reserve, while Apple overtook Microsoft as the world’s most valuable company.
Apple’s shares climbed 3.7% to hit a record high and dethrone Microsoft for the first time in five months, with the iPhone maker’s market valuation rising to $3.24 trillion versus Microsoft’s $3.23 trillion.
The latest spurt came soon after Apple launched its artificial intelligence-integrated products on Monday, when it sprinted past AI chip powerhouse Nvidia’s $3 trillion valuation.
Risk sentiment was boosted after a Labor Department report showed the Consumer Price Index was unchanged on a monthly basis in May, when it was expected to rise 0.1%. On an annual basis, inflation rose 3.3%, lower than economists’ expectation of a 3.4% increase.
CPI, excluding volatile food and energy prices, rose 0.2%, compared with an expectation of a 0.3% rise, while core inflation rose 3.4% on an annual basis, versus a forecast of 3.5%.
Markets boosted expectations for a September start to rate cuts after the data, pricing in an over 70% chance, according to the CME’s FedWatch tool, from 54% prior to the report.
“It certainly seems as if the trend in inflation continues to be our friend, working its way lower and taking the Street by surprise… that is going to end up working in favor of the Fed,” said Sam Stovall, chief investment strategist at CFRA Research.
The focus now turns to the Fed’s policy announcement, due later in the day.
Rate-sensitive megacap stocks rose as Treasury yields fell, with Microsoft, Alphabet and Nvidia up between 1.3% and 2.8%. An index tracking chip stocks jumped to an all-time high.
Rate-sensitive real-estate stocks led sectoral gains, while the small-cap Russell 2000 Index rose 2.7%.
With rates overwhelmingly expected to remain unchanged, markets will focus primarily on Fed Chair Jerome Powell’s press conference and the central bank’s updated Summary of Economic Projections, particularly the “dot plot”, which shows where policymakers expect interest rates to stand this year and long term.
At 9:55 a.m. ET, the Dow Jones Industrial Average was up 269.64 points, or 0.70%, at 39,017.06, the S&P 500 was up 57.32 points, or 1.07%, at 5,432.64, and the Nasdaq Composite was up 283.54 points, or 1.63%, at 17,627.09.
Among others, Oracle gained 12.2% after forecasting double-digit revenue in fiscal year 2025 after the bell on Tuesday.
U.S.-listed shares of electric-vehicle maker Nio slipped 2.5% after a report that the European Commission will levy extra tariffs on imported Chinese EVs.
Paramount Global fell 2.3% after Shari Redstone, ended talks for a potential merger with David Ellison’s Skydance Media.
Advancing issues outnumbered decliners by a 6.83-to-1 ratio on the NYSE, and by a 3.75-to-1 ratio on the Nasdaq.
The S&P index recorded 33 new 52-week highs and no new lows, while the Nasdaq recorded 74 new highs and 22 new lows.
