US stocks soared to new highs on Wednesday, driven by Jerome Powell's remarks on Capitol Hill, which bolstered hopes for rate cuts, and significant gains in Big Tech stocks.

The S&P 500 rose 1%, reaching a record high of over 5,600. The Dow Jones Industrial Average jumped 1.1%, and the Nasdaq Composite gained 1.2%. Both the S&P and Nasdaq marked their seventh consecutive session of gains.

Major tech companies powered the market's rise. Nvidia advanced over 2%, while Apple, Microsoft, and Google each gained more than 1%. These gains underscore the continued strength of tech giants in driving broader market performance.

 

Powell’s Remarks Fuel Rate Cut Speculation

Jerome Powell's semiannual testimony to Congress indicated potential for rate cuts, boosting market sentiment. Powell highlighted cooling inflation and job market trends, suggesting a shift away from the current two-decade high interest rates. This dovish stance fueled investor optimism for rate cuts possibly starting in September.

Upcoming Consumer Inflation Report

A critical test for stocks and rate cut expectations is the upcoming consumer inflation report. A cooler inflation reading would likely cement expectations for a Fed policy shift. Conversely, a too-low print might reignite recession fears.

Market Highlights

  • Apple (AAPL): Shares rose nearly 1.5% after Needham analysts raised the price target from $220 to $260, citing Apple's $110 billion stock buyback authorization.
  • Mastercard (MA): Dropped 3% following a downgrade by Bank of America analysts, citing valuation concerns and regulatory issues.
  • Carvana (CVNA): Shares surged over 3% after Needham upgraded the stock to Buy from Hold, with a price target of $160.
  • Intuit (INTU): Fell 3% after announcing layoffs of 1,800 employees and a pivot to AI-powered tax software.

 

Political and Economic Context

Republicans are linking immigration to inflation in their 2024 campaign, suggesting that an immigration crackdown could help reduce high prices, particularly in housing.

CNN announced further layoffs as part of a digital focus and upcoming subscription product launch, impacting around 100 employees.

Ahead of Thursday's Consumer Price Index (CPI) report, investors remain hopeful for continued positive economic data to support rate cut predictions.

 

Summary

Big Tech's gains and Powell's rate cut hints have propelled the S&P 500 to unprecedented heights. As markets await the CPI report, investor sentiment remains optimistic for favorable economic conditions.