S&P 500 sets new record following Fed & inflation news

The S&P 500 and the Nasdaq both hit all time highs closing at new records following the Fed’s policy announcement and May CPI numbers that pointed to easing inflationary pressures.

The S&P 500 closed 0.85 per cent higher to finish the day at a new record 5,421.03. The Nasdaq rallied 1.53 per cent to also close at a new record 17,608.44. The Dow Jones again bucked the trend to just tip into the red closing down 0.09 per cent.

Markets were dominated by the Fed and the May CPI data. As expected the Fed kept interest rates unchanged. The Fed also commented that progress has been made on the inflation front albeit not overwhelmingly. The Fed commented that “In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective.”

The Fed’s latest projections released on Wednesday, indicated the Fed only sees one rate cut taking place this year. That is down from three expected rate cuts in early 2024.

The consumer price index was unchanged for the month of May, lower than the Dow Jones estimate for a 0.1 per cent monthly increase. Year over year, the inflation metric increased 3.3 per cent, which also came in below expectations and represented a slowing from the prior 3.4 per cent pace. Monthly and yearly numbers for core CPI, which excludes the volatile prices associated with energy and food, were also lower than anticipated.

Following the CPI report, the yield on the U.S. 10-year Treasury note initially dropped but later reduced its decline after Fed Chair Jerome Powell emphasised ongoing inflation concerns. Ultimately, the yield was set to end the day down 7 basis points at 4.33 per cent, having earlier fallen to 4.25 per cent, its lowest since April 1.

In company related news, tech bellwethers Apple and Nvidia surged. Apple’s gains helped it overtake Microsoft as the world’s most valuable publicly traded company, whilst Nvidia rallied as enthusiasm for artificial intelligence deepens.

Turning to US sectors, following gains in Nvidia and Apple, Tech was the best performer, closing 2.5 per cent higher. Energy was the worst performer, followed by Consumer Staples and then Utilities

Futures

The SPI futures are pointing to a 0.7 per cent gain.

Currency

One Australian dollar at 7.30am was buying 66.64 US cents.

Commodities

Gold has added 1.21 per cent. Silver has gained 3.54 per cent. Copper has risen 1.46 per cent. Oil has gained 0.77 per cent.

Figures around the globe

European markets closed higher. London’s FTSE added 0.83 per cent, Frankfurt gained 1.42 per cent, and Paris closed 0.97 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei fell 0.66 per cent, Hong Kong’s Hang Seng lost 1.31 per cent while China’s Shanghai Composite closed 0.31 per cent higher.

Yesterday, the Australian share market closed 0.51 per cent lower at 7,715.51.

Ex-dividends
Champion Iron Ltd (ASX:CIA) is paying 11.0241 cents unfranked
Incitec Pivot (ASX:IPL) is paying 4.3 cents unfranked
Plato Inc Max Ltd (ASX:PL8) is paying 0.55 cents fully franked
WCM Global Growth (ASX:WQG) is paying 1.74 cents fully franked

Dividends payable
Dalrymple Bay Infrastructure Ltd (ASX:DBI)
Hancock & Gore Ltd (ASX:HNG)
ResMed Inc (ASX:RMD)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

Disclaimer

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