Johann M. Cherian and Lisa Pauline Mattakal
(Reuters) – The Nasdaq broke 17,000 for the first time on Tuesday, helped by artificial intelligence darling Nvidia (NASDAQ:) jumping to a record high even as focus shifted to key inflation data later in the week , which may affect expectations regarding the Fed’s rate cut path.
Nvidia’s profit led other chip stocks higher, with the Philadelphia Semiconductor Index rising 1.7% as traders returned from the holiday-long weekend.
The Dow Jones Industrial Average lagged other indexes as health care and financial stocks fell. Healthcare also led the subsector’s losses with an 8% decline. Moderna (NASDAQ:) .
The possibility that the world’s most powerful central bank could begin cutting interest rates this year has sent Wall Street to its biggest rally since late 2023, with the Nasdaq and S&P 500 indexes posting their fifth straight week of gains on Friday.
However, expectations about the timing of rate cuts are fluctuating and policymakers are wary as data continues to show persistent inflation.
Market attention is now turning to the core US PPI report for April, which will be released later this week. The Fed’s preferred inflation barometer is expected to remain stable on a monthly basis.
“There is an emerging understanding in the investment community that it is unlikely that the Fed will cut rates in 2024. As we await the next economic data, investors will be watching to see whether these results will reinforce the changing view that there will be no rate cuts this year,” said Peter Andersen, founder of Andersen Capital Management.
According to the CME FedWatch Tool, the likelihood of a rate cut of at least 25 basis points exceeding the 50% mark is only in November and December of this year.
U.S. trading is moving to shorter settlement on Tuesday, which regulators hope will reduce risk and improve efficiency but is expected to temporarily increase the number of failed transactions for investors.
Minneapolis Fed President Neel Kashkari told CNBC that the U.S. central bank should wait before cutting interest rates, adding that it could potentially even raise rates if inflation does not fall further.
At 11:29 a.m., down 130.37 points, or 0.33%, to 38,939.22, the S&P 500 added 3.92 points, or 0.07%, to 5,308.64, up 87.15 points. or 0.52%, to 17,008.27.
UBS Global Research raised its year-end target for the benchmark index to 5,600 from a previous forecast of 5,400, the highest forecast among major brokerages.
Apple (NASDAQ:) shares rose nearly 0.9% after iPhone sales in China rose 52% in April from a year earlier, Reuters calculations based on industry data showed.
United States Cellular (NYSE:) shares rose 3% after T-Mobile said it would buy nearly all of the regional carrier’s wireless businesses for $4.4 billion.
Shares of GameStop (NYSE:) jumped 24% after the video game retailer said late Friday that it had raised $933 million by selling 45 million shares in an at-the-market offering.
Advancing issues outnumbered declining ones by a 1.12-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq.
The S&P 500 posted 23 new 52-week highs and eight new lows, while the Nasdaq Composite posted 75 new highs and 61 new lows.