S&P 500: US stocks close on interest rate cut expectations

New York stock markets closed flat on Thursday (12) on the back of positive US inflation data. Expectations that the Federal Reserve (Fed) will cut interest rates have strengthened despite the bank’s cautious talk.

Index Performance:

• Dow Jones Fall 0.17% (38,646.58 points);
• S&P 500 rises 0.23% (5,433.64 points);
• Nasdaq Advances 0.34% (17,667.56 points)

Inflation data

Markets reacted to an unexpected drop in the producer price index (PPI) in May. The data, along with the previously released soft consumer price index (CPI), reinforced expectations that the central bank may make two interest rate cuts later this year. This view was confirmed by the CME Group platform, which tracks market challenges.

Federal Reserve Expectations

Despite the market confidence, Federal Reserve Chairman Jerome Powell reiterated that monetary easing will only happen when there is confidence in inflation control. Most members of the Federal Open Market Committee (FOMC) are projecting only one rate cut in 2024, as indicated by the dot plot.

Stock market

Semiconductor maker Broadcom rose 12.27% to stand out after reporting better-than-expected profit and revenue, driven by demand for artificial intelligence products. Next, Nvidia rose 3.52%, Qualcomm 1.12% and Micron Technology 1.70%.

Boeing, on the other hand, fell 1.08%, amid investigations into quality defects on the yet-to-be-delivered 787 model aircraft.

Also in the spotlight is Tesla’s shareholder vote on whether to approve a $56 billion pay package for CEO Elon Musk, a move some big investors have opposed.

Overnight, Musk said compensation and the electric vehicle maker’s Texas move were approved by “broad margins.” Tesla shares rose about 3% in the session.