The S&P 500 and Nasdaq posted record closing highs for a third straight day on Wednesday after inflation data came in softer than expected but the indexes ended off the day's highs as the Federal Reserve projected only one interest rate cut this year.
Market Snapshot
The Dow Jones Industrial Average fell 35.21 points, or 0.09%, to 38,712.21. The S&P 500 rose 45.71 points, or 0.85%, to 5,421.03 and the Nasdaq Composite advanced 264.89 points, or 1.53%, to 17,608.44.
Market Movers
Apple - Apple shares rose 2.9% on Wednesday to $213.07, which is its second record close in two days. It briefly reclaimed its status from Microsoft as the most valuable company by market capitalization. The stock finished at a record high on Tuesday, which was its first record close since December 2023. Driving the stock higher has been Apple’s AI strategy, which was announced Monday at the tech giant’s Worldwide Developers Conference.
GameStop - GameStop stock was down 16.5% after surging 23% on Tuesday. The stock had been volatile during the session. It traded higher after GameStop said Tuesday it raised $2.14 billion from a stock sale.
Oracle - Oracle reported fiscal fourth-quarter adjusted earnings of $1.63 a share, below analysts’ expectations of $1.65, but the stock soared 13.3% after the software company issued upbeat guidance. CEO Safra Catz said in a press release that “each successive quarter should grow faster than the previous quarter—as [ Oracle Cloud Infrastructure] capacity begins to catch up with demand.” Catz said Oracle signed more than 30 artificial-intelligence sales contracts for more than $12.5 billion in the fourth quarter, including one with ChatGPT developer OpenAI.
Builders FirstSource - Builders FirstSource stock jumped 5.4%. Shares of the building-materials supplier got a lift from falling bond yields and hopes of interest-rate cuts following the latest inflation reading.
Casey's General - Casey’s General Stores stock rose 16.7% after the convenience-store chain reported fiscal fourth-quarter revenue that was better than expected and after saying it anticipates inside same-store sales growth of 3% to 5% in the current fiscal year.
Rentokil Initial PLC - Shares of Rentokil Initial, the parent company of Terminix, rose nearly 14% after a report that activist investor Nelson Peltz’s Trian Fund has become one of the company’s top 10 shareholders.
Rubrik Inc. - Rubrik, the data security software company, reported better-than-expected results in its first quarter as a public company, and issued guidance for annual recurring revenue in fiscal 2025 that topped estimates. The stock, however, was down 8.9%.
Klaviyo, Inc. - Klaviyo stock was up 3.9% to $23.47 after analysts at Barclays upgraded shares of the marketing-automation company to Overweight from Equal Weight and raised the price target to $29 from $25.
Broadcom - Broadcom stock was up 2.4% ahead of fiscal-second-quarter earnings scheduled for after the closing bell Wednesday.
Chipmaker Broadcom raised its annual revenue forecast on Wednesday and announced a stock split, following a massive rally in the stock, with Wall Street betting heavily on the hardware that supports the generative AI technology. The shares surged 13.6% in extended trading.
Market News
Fed Leaves Rates Unchanged, Sees Only One 2024 Cut Despite Inflation Progress
The Federal Reserve held interest rates steady on Wednesday and pushed out the start of rate cuts to perhaps as late as December as policymakers sketched out their view of an economy that remains virtually unchanged across its major dimensions for years to come.
With growth and unemployment lodged at levels better than the U.S. central bank considers sustainable in the long run, Fed Chair Jerome Powell said policymakers were content to leave rates where they are until the economy sends a clear signal that something else is needed - through either a more convincing decline in price pressures or a jump in the unemployment rate.
So far, Powell noted in a press conference after the end of a two-day policy meeting, inflation had fallen without a major blow to the economy, and he said there was no reason to think that can't go on.
"These dynamics can continue as long as they continue," Powell said. "We've got a good strong labor market. We think we've been making progress toward the price stability goal. We're asking ... is our policy stance about right? And we think yes, it's about right."
US Consumer Prices Unchanged in May; Bolster Rate Cut Expectations
U.S. consumer prices were unexpectedly unchanged in May as cheaper gasoline and other goods offset higher costs for rental housing, but inflation remains too high for the Federal Reserve to start cutting interest rates before September.
The report from the Labor Department on Wednesday also showed underlying inflation pressures abated significantly last month, with the cost of motor vehicle insurance declining on a monthly basis for the first time since the fourth quarter of 2021. The data prompted financial markets to boost the probability that the U.S. central bank would cut rates in September as well as in December.
Policymakers on Wednesday, however, projected only a single quarter-percentage-point reduction in borrowing costs, with the easing cycle possibly not starting before December.
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