US close: Late rally sends Nasdaq to new all-time high
US stocks finished the day with moderate gains despite more hawkish comments from the head of Federal Reserve and rising concerns about sticky inflation, with the Nasdaq reaching another record high.
After trading more or less flat for most of the session, a late rally sent the Dow up 0.3%, the S&P 500 up 0.5% and the Nasdaq up 0.8% to a new closing high of 16,511.18 – its seventh record close of the year so far.
Wall Street opened in a subdued fashion following stronger-than-expected wholesale inflation data and comments from Federal Reserve chair Jerome Powell, who reinforced the central bank's approach to wait and see regarding incoming economic indicators before making any changes to interest rates.
Regarding stronger-than-expected inflation readings in the first quarter, Powell said: "We did not expect this to be a smooth road, but these were higher than I think anybody expected." He said the central bank would "need to be patient and let restrictive policy do its work".
Inflation in focus
April's producer price index (PPI) increased by 0.5% month-on-month, ahead of the 0.3% consensus forecast, while annual PPI inflation picked up to 2.2% – the strongest rate since April 2023. However, while the data reignited concerns that inflation may prove sticker than anticipated – given how wholesale inflation is often passed on to customers at the till – it wasn't all bad news.
According to Matthew Martin at Oxford Economics, the components of the PCE price deflator – the price gauge targeted by the Fed – that were extracted from the PPI data likely indicated a "softer" rise in that index in April. Martin also noted the role played by crude prices in the jump in wholesale inflation, due to fears over the Middle East conflict in April, which had since unwound. And given the output increases from OPEC+ pencilled in for the back half of 2024, April's increase would not hold, he said.
US consumer price inflation stats will now be in focus, with forecasts for a 10 basis-point decline in April's headline annual rate to 3.4% when figures are released on Wednesday. However, any upside surprise will likely reinforce expectations that the Fed will hold off from cutting interest rates for longer.
According to David Morrison, senior market analyst at Trade Nation, US inflation data has the potential to trigger some "violent moves" across all financial markets, which could set the stage for stock market behaviour over the whole summer.
"That may sound a bit dramatic considering that the markets don’t expect any changes in Fed Funds until the third or fourth quarter, but sentiment is everything. If there’s no improvement in this week’s inflation numbers, then investors may feel it’s a good time to cut their exposure and come back in early September after Jackson Hole," Morrison said.
Elsewhere on the macro front, the National Federation of Independent Business revealed that optimism among small businesses in the US has increased for the first time this year, but still remains well below the long-term average as inflation continues to weigh on confidence. The NFIB's small business optimism index rose by 1.2 points in April to 89.7, as the sales outlook and job-creation expectations both improved.
Meme stocks continue to surge
Shares in GameStop and AMC soared after "Roaring Kitty", the Reddit user at the centre of the meme stock craze, posted online for the first time in three years. GameStop gained 60%, having now risen more than 180% over the past two days, while AMC jumped 32%, taking its two-day gain to 136%.
Other names regarded as meme stocks, such as BlackBerry and Koss, also raced higher.
However, Kathleen Brooks, research director at XTB, said GameStop may not see the same interest as it did in 2021, when the share price increased by more than 1,600% over a one-month period.
She said: "There are a couple of differences between 2021 and 2024, not least that the stock price is far higher now than it was before the meme stock craze in 2021. Back then it was trading around $5, today it is trading at $30 [Monday's closing price], so it may not be as much of a bargain as it once was."
A number of overseas companies with secondary listings on Wall Street were making moves on Tuesday: UK telecoms group Vodafone rose strongly after beating forecasts with its full-year results; Japanese conglomerate Sony jumped after surpassing quarterly revenue estimates; while Chinese tech giant Alibaba dropped sharply after a significant decline in quarterly profits.
Dow Jones - Risers
Intel Corp. (INTC) $31.05 1.77%
JP Morgan Chase & Co. (JPM) $201.51 1.40%
Boeing Co. (BA) $180.74 1.30%
Walgreens Boots Alliance, Inc. (WBA) $18.35 1.27%
American Express Co. (AXP) $241.62 1.21%
Goldman Sachs Group Inc. (GS) $458.47 1.08%
Amgen Inc. (AMGN) $311.64 1.03%
Microsoft Corp. (MSFT) $416.56 0.69%
Apple Inc. (AAPL) $187.43 0.62%
Cisco Systems Inc. (CSCO) $48.95 0.55%
Dow Jones - Fallers
Walmart Inc. (WMT) $59.86 -0.91%
Coca-Cola Co. (KO) $63.10 -0.75%
Visa Inc. (V) $277.74 -0.59%
Chevron Corp. (CVX) $163.61 -0.56%
Merck & Co. Inc. (MRK) $128.66 -0.49%
Walt Disney Co. (DIS) $105.35 -0.45%
Salesforce.Com Inc. (CRM) $276.80 -0.26%
McDonald's Corp. (MCD) $270.66 -0.24%
Home Depot Inc. (HD) $340.82 -0.13%
Verizon Communications Inc. (VZ) $40.49 -0.12%
S&P 500 - Risers
CenturyLink Inc. (LUMN) $1.33 6.40%
Macerich Co (MAC) $16.50 6.38%
Globe Life Inc. (GL) $88.63 4.02%
Vornado Realty Trust (VNO) $25.40 3.89%
Oracle Corp. (ORCL) $120.87 3.87%
Idexx Laboratories Inc. (IDXX) $521.46 3.67%
Western Digital Corp. (WDC) $73.54 3.62%
Sl Green Realty Corp. (SLG) $54.77 3.34%
Seagate Technology Plc (STX) $96.25 3.33%
TripAdvisor Inc. (TRIP) $19.25 3.27%
S&P 500 - Fallers
Gap Inc. (GPS) $21.52 -3.32%
FedEx Corp. (FDX) $259.04 -2.94%
Coty Inc. Class A (COTY) $10.94 -1.97%
Clorox Co. (CLX) $138.63 -1.93%
Marathon Petroleum Corporation (MPC) $174.51 -1.88%
Constellation Brands Inc. Class A (STZ) $254.04 -1.85%
United Parcel Service Inc. (UPS) $147.94 -1.77%
CSX Corp. (CSX) $33.93 -1.71%
Perrigo Company plc (PRGO) $30.29 -1.66%
Archer-Daniels-Midland Co. (ADM) $61.70 -1.53%
Nasdaq 100 - Risers
Vodafone Group Plc ADS (VOD) $9.19 4.79%
Idexx Laboratories Inc. (IDXX) $521.46 3.67%
Western Digital Corp. (WDC) $73.54 3.62%
Seagate Technology Plc (STX) $96.25 3.33%
Tesla Inc (TSLA) $177.55 3.29%
Broadcom Inc. (AVGO) $1,380.03 3.18%
QUALCOMM Inc. (QCOM) $189.01 2.61%
Illumina Inc. (ILMN) $115.59 2.50%
Gen Digital Inc. (GEN) $24.54 2.25%
KLA-Tencor Corp. (KLAC) $729.92 2.21%
Nasdaq 100 - Fallers
Qurate Retail Inc. (QRTEA) $0.79 -4.61%
Baidu Inc. (BIDU) $109.42 -2.12%
CSX Corp. (CSX) $33.93 -1.71%
Adobe Systems Inc. (ADBE) $475.95 -1.48%
JD.com, Inc. (JD) $33.35 -1.27%
Biomarin Pharmaceutical Inc. (BMRN) $79.65 -1.06%
Dollar Tree Inc (DLTR) $118.96 -1.03%
Incyte Corp. (INCY) $57.05 -0.95%
Kraft Heinz Co. (KHC) $36.17 -0.88%
Automatic Data Processing Inc. (ADP) $245.66 -0.86%