The S&P 500 and Nasdaq nabbed new record closes on Tuesday (and also each notched their sixth straight day of gains) as rate cut hopes remained intact after Federal Reserve chair Jerome Powell kicked off his semiannual update to Congress.
The S&P 500 (^GSPC) finished just above the flatline to book its 36th record close of the year, while the tech-heavy Nasdaq Composite (^IXIC) also built on its previous record to close up about 0.1%. The Dow Jones Industrial Average (^DJI), which seesawed throughout the trading session, closed down around 0.1%.
Stocks have achieved fresh all-time highs as signs of a US economic slowdown bolster bets on interest-rate cuts.
Powell shed light on the Fed’s picture of the economy, commencing his twice-yearly policy update to Congress on Tuesday with an appearance in the Senate. In prepared remarks, the central bank leader said he’s encouraged by evidence of cooler inflation, but that the Fed still needs more “good data” to be confident that inflation is moving towards its 2% target.
Traders still placed bets that the Fed will cut interest rates twice this year. “We’re increasingly confident in our forecast that the Fed will cut rates in September,” wrote Oxford Economics chief US economist Ryan Sweet.
Powell will appear before the House on Wednesday, setting the stage for a key update on consumer inflation on Thursday — all potential catalysts for stocks if they confirm a cooling.
But a note of caution is seeping into the market as the idea of a summer pullback gets more backers, with Morgan Stanley strategist Mike Wilson calling for a 10% correction.
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