Inflation Report, Fed Remarks Send Stocks to Record Highs

Oracle jumps 13.3%
By Newser Editors and Wire Services
Posted Jun 12, 2024 4:02 PM CDT
Inflation Report, Fed Remarks Send Stocks to Record Highs
Specialist John McNierney works on the floor of the New York Stock Exchange, Wednesday, June 12, 2024.   (AP Photo/Richard Drew)

US stocks closed higher Wednesday following a surprisingly encouraging update on inflation. The S&P 500 closed at another record high after the Federal Reserve said that it still sees a cut to interest rates as likely this year.

  • The S&P 500 rose 45.71 points, or 0.9%, to 5,421.03.
  • The Dow Jones Industrial Average lagged the market and fell 35.21 points, or 0.1%, to 38,712.21.
  • The Nasdaq composite rose 264.89 points, or 1.5%, to an all-time high 17,608.44.
The action was even stronger in the bond market, where Treasury yields dropped after the inflation report showed US consumers paid prices that were 3.3% higher for food, insurance and everything else last month from a year earlier, the AP reports. Economists had been expecting to see the inflation rate stuck at 3.4%.

For Wall Street, a slowdown in inflation not only helps US households struggling to keep up with fast-rising prices, it also opens the door for the Federal Reserve to cut its main interest rate. Such a move would ease pressure on the economy and give a boost to investment prices. Everything from bitcoin to gold to copper rallied after the inflation data raised expectations for coming cuts to interest rates. A measure of nervousness among investors in US stocks also eased. The Fed indicated Wednesday that most of its policymakers are still forecasting at least one cut to interest rates at some point this year. They also raised their forecast for the number of cuts in 2025.

Oracle helped lead Wall Street higher with a jump of 13.3% even though it reported weaker profit for the latest quarter than analysts expected. Nvidia again was one of the strongest forces pushing the S&P 500 higher, with a gain of 3.6%. Apple jumped 2.9%. Its stock has been rising the last two days after getting a cool initial reception to the announcement of several AI-related offerings. Real-estate stocks also climbed. Lower interest rates mean bonds are paying less in interest, which can send potential investors to dividend-paying real-estate owners instead. Office owner Boston Properties jumped 2.7%. (More stock market stories.)

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