A weaker-than-expected inflation report in May sparked a bullish frenzy on Wall Street, with investors increasing bets on a rate cut as confidence grows that the Federal Reserve will ease its policy stance later this year amid rising price pressures toward its 2% target.
Consumer Price Index (CPI) data revealed that monthly and annual inflation rates were lower than expected in both headline and core items.
The report was released just before the highly anticipated Federal Open Market Committee (FOMC) meeting, which begins today at 2pm ET.
The likelihood of a rate cut by September has jumped to 72% from 54% before the inflation report. Fed futures are currently suggesting a 55 basis point cut (the equivalent of two rate cuts) by the end of the year.
Rising expectations of rate cuts have seen traders quickly pivot to riskier assets.
The tech-heavy Nasdaq 100 index rose 1.4% to above 19,400, a new record high, while the S&P 500 index rose 1.1% to above 5,400, also hitting a new all-time high.
Blue chip stocks rose a modest 0.2%, but it was small caps that delivered the standout performance. iShares Russell 2000 ETF (NYSE:IWM) rose 2.7% to its highest close since mid-December 2023.
Treasury yields fell across the board, with the 2-year yield falling 15 basis points to 4.68%. Longer-term bond yields also fell about 10 basis points, iShares 20+ Year Treasury ETF (NASDAQ:TLT) rose 1.6%, its best one-day performance since early February 2024.
Interest-sensitive industries made huge gains. SPDR S&P Homebuilders ETF (NYSE:XHB) and SPDR S&P Regional Bank ETF (NYSE:KRE) rose 4.6% and 3.5%, respectively.
Precious metals also rose on the back of falling yields and a weaker dollar, with gold rising 0.8% and silver soaring 2.8%.
Cryptocurrencies surged, driven by risk-on sentiment. Bitcoin (Cryptocurrency: BTC) rose 3.6% to $69,800, but speculative activity was strong. Dogecoin (Cryptocurrency: DOGE) surged more than 8% on the day.
Wednesday's performance of major U.S. stock indexes and ETFs
|
Key Indicators |
price |
Daily change rate |
|
Russell 2000 |
2,072.95 |
2.6% |
|
Nasdaq 100 |
19,471.20 |
1.4% |
|
S&P 500 |
5,435.07 |
1.1% |
|
Dow Jones |
38,819.58 |
0.2% |
Updated 12:15 p.m.
According to data from Benzinga Pro:
-
of SPDR S&P 500 ETF Trust (NYSE:SPY) rose 1.1% to $542.76.
-
of SPDR Dow Jones Industrial Average (NYSE:DIA) rose 0.2% to $388.81.
-
Technology Focus Invesco QQQ Trust (ARCA: QQQ) rose 1.4 to $474.65.
-
By sector, technology Select Sector SPDR Fund (NYSE:XLK) rose 2.6% Energy Select Sector SPDR Fund (NYSE:XLE) lagged, falling 0.8%.
Wednesday's stock price movements
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Apple. (NASDAQ:AAPL) rose 4.7%. Microsoft (NYSE:MSFT) is the largest company in the world.
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Tesla Inc. (NASDAQ:TSLA) rose more than 4% after Cathie Wood offered a bullish outlook for the EV maker.
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The best performing real estate stocks were Jiro Group Inc. (NASDAQ:Z), eXp World Holdings Inc. (NASDAQ:EXPI) and Redfin Inc. (NASDAQ:RDFN) rose 13.7%, 11%, and 9.4%, respectively.
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Of the stocks investing in the office and commercial real estate sector, SL Green Realty Co., Ltd. (NYSE:SLG) and Vornado Real Estate Trust (NYSE:VNO) rose 8.3% and 8%, respectively.
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In the local banking industry, First Foundation Co., Ltd. (NYSE:FFWM) and Western Alliance Bancorp. (NYSE:WAL) was the biggest gainer, rising 7.5% and 7%, respectively.
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Casey's General Stores, Inc. (NASDAQ:CASY) surged more than 17% after better-than-expected quarterly profit and revenue.
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Other stocks that react to corporate earnings Oracle Corporation (NASDAQ:ORCL) up 12.7% Autodesk, Inc. (NASDAQ:ADSK) up 5.3% Rubrik Inc. (NYSE:RBRK) down 4.9%.
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Companies scheduled to report earnings after the close of trading on Wednesday Broadcom. (NASDAQ:AVGO), Dave & Buster's Entertainment Inc. (NASDAQ:PLAY), and Oxford Industries Ltd. (NYSE:OXM).
Read now: Short seller Citron liquidates GameStop short position, says he “respects market irrationality”
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The article Falling Inflation Helps Bulls Push Wall Street to Record Highs While Tech, Real Estate and Small Caps Surge Ahead of Fed Meeting: What's Moving the Market on Wednesday? originally appeared on Benzinga.com.
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