Wall Street achieved its highest level in over a year on Wednesday, thanks to a report indicating that inflation had cooled more than anticipated. This development is expected to alleviate some of the pressure on the economy. The S&P 500 reached its strongest closing level since April 2022, rising by 0.7% to 4,472.16. The Dow Jones Industrial Average increased by 0.3% to 34,347.43, while the Nasdaq composite gained 1.2% to 13,918.96. As a result of the cooler inflation data, treasury yields dropped in the bond market, leading traders to dial back predictions of interest rate hikes by the Federal Reserve later this year. Most stocks on Wall Street saw gains, from prominent Big Tech companies to more traditional utility firms, although the momentum waned slightly as the day progressed.
The latest inflation update from the US government revealed that consumers paid prices that were 3% higher overall in June compared to the previous year, mainly for gasoline, food, and other goods. This is a decline from the 4% inflation experienced in May and the 9% inflation recorded last summer. Of significance, this figure was slightly lower than economists had predicted. Traders are still confident that the Federal Reserve will increase the federal funds rate to a range of 5.25% to 5.50% at its upcoming meeting, the highest level since 2001. However, expectations are growing that this could be the final increase, following a year in which rates began at nearly zero.
On Wall Street, Microsoft and Nvidia were the primary drivers behind the rise in the S&P 500, with both companies seeing gains of at least 1.4%. Banks also made gains on the hope that rate hikes would be put on hold. Previous rate hikes had negatively impacted banks, as they lowered the value of loans and bonds acquired when rates were extremely low. Comerica and KeyCorp. both saw significant gains of 3.8% and 4.6%, respectively, in the S&P 500. Additionally, Domino’s Pizza experienced the largest gain in the index, jumping by 11.9% after announcing a partnership allowing customers to order through Uber Eats.
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