The Nasdaq /zigman2/quotes/210598365/realtime COMP +0.26% index closed at a record on Wednesday’s close, while the U.S. benchmark S&P 500 briefly topped the 3,000 milestone for the first time, after Federal Reserve chairman Jerome Powell indicated interest rates cuts may be imminent in the face of some weakening economic data.
How are the major benchmarks faring?
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.26% gained 60.80 points, or 0.75%, closing out the session at record 8,202.53. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA 0.00% added 76.71 points, or 0.29%, at 26,860.20, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.16% closed 13.44 points higher, or 0.45%, to 2,993.07.
At session highs, the Dow rose 199.96 points, or 0.7%, to 26,983.45, while the S&P added 22.26 points, or 0.8% to 3,002.89 and the Nasdaq advanced 86.87 points, or 1.1% to 8.228.60. Those intraday highs marked new records for all three benchmarks.
What’s driving the market?
Investor sentiment turned slightly less bullish in the wake of the new intra-day index highs after the release of Federal Reserve minutes from its June meeting, which showed a Fed ready to act to support the U.S. economy.
“You don’t want too much bad news, where you think the economy is faltering,” said Joseph Saluzzi, co-head of equity trading at Themis Trading, in an interview with MarketWatch.
“You see the Fed minutes and think maybe things are a little bit worse,” he said. “Maybe people are getting a little nervous about corporate earnings.”
Still, stocks broadly rallied after the publication of Powell’s remarks before the House Financial Services Committed in which the Fed Chairman emphasized rising risks to the U.S. economy from trade policy and slowing global growth, as well as falling price inflation.
Powell noted that while the U.S. jobs market remains robust and consumer spending appears set to rebound, business investment has slowed considerably, along with housing investment and manufacturing output.
“Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee’s 2 percent objective,” Powell said in prepared remarks. “However, uncertainties about the outlook have increased in recent months. In particular, economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy.”
“A rate cut in July is now all but certain,” Aberdeen Standard Investments senior global economist, James McCann, wrote. “The strength of last week’s jobs number did lead some to think that the Fed may pause for thought. It’s clear from [Powell’s testimony] that they won’t.”
“There’s an element here of the Fed wanting to take pre-emptive action,” he added. “From an inflation perspective, the picture certainly seems sour enough to warrant a reaction. But from a growth perspective, there’s nothing in the data that suggests a rate cut is strictly necessary.”
Powell began taking questions from members House Financial Services Committee at 10 a.m. Eastern Time, after which stocks pared some of their gains. The move was likely a case of “buy the rumor, sell the news,” given that a July cut was “already being priced into the market,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management an interview with MarketWatch.