The S&P 500 jumped to a record Wednesday after the Federal Reserve’s latest policy announcement and May inflation data pointed to easing pricing pressures.
The broader market index climbed 0.8%, while the Nasdaq Composite gained 1.5%. Both the S&P 500 and Nasdaq hit all-time highs on Wednesday and had cinched closing records in the prior session. The Dow Jones Industrial Average slipped 0.2%.
The Fed kept interest rates unchanged, as was widely expected. The central bank also indicated progress has been made on the inflation front, noting: “In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.”
However, the Fed’s latest projections, also released Wednesday, showed the central bank only sees one rate cut taking place this year. That’s down from three expected at the start of 2024.
Wednesday’s announcement followed the release of fresh U.S. inflation.
The consumer price index was unchanged for the month of May, lower than the Dow Jones estimate for a 0.1% monthly increase. Year over year, the inflation yardstick increased 3.3%, which also came in below expectations and represented a slowing from the prior 3.4% pace. Monthly and yearly numbers for core CPI, which excludes the volatile prices associated with energy and food, were also lower than anticipated.
“The CPI neutralized the hawkish Fed,” said Jay Hatfield, founder and chief investment officer of InfraCap. “Most market participants believe the economy is slowing, and they’re going to have to cut rates. So that’s why we think the market was shrugging off this really hawkish SEP of just one cut.”
The 10-year Treasury yield dropped below 4.3%.
The broader market index climbed 0.8%, while the Nasdaq Composite gained 1.5%. Both the S&P 500 and Nasdaq hit all-time highs on Wednesday and had cinched closing records in the prior session. The Dow Jones Industrial Average slipped 0.2%.
The Fed kept interest rates unchanged, as was widely expected. The central bank also indicated progress has been made on the inflation front, noting: “In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.”
However, the Fed’s latest projections, also released Wednesday, showed the central bank only sees one rate cut taking place this year. That’s down from three expected at the start of 2024.
Wednesday’s announcement followed the release of fresh U.S. inflation.
The consumer price index was unchanged for the month of May, lower than the Dow Jones estimate for a 0.1% monthly increase. Year over year, the inflation yardstick increased 3.3%, which also came in below expectations and represented a slowing from the prior 3.4% pace. Monthly and yearly numbers for core CPI, which excludes the volatile prices associated with energy and food, were also lower than anticipated.
“The CPI neutralized the hawkish Fed,” said Jay Hatfield, founder and chief investment officer of InfraCap. “Most market participants believe the economy is slowing, and they’re going to have to cut rates. So that’s why we think the market was shrugging off this really hawkish SEP of just one cut.”
The 10-year Treasury yield dropped below 4.3%.
