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US stocks rose on Wednesday after a new inflation reading showed consumer prices rose less than expected in May. The latest snapshot of inflation comes hours before the Federal Reserve’s upcoming afternoon meeting that will provide the latest signal on the path for interest rates.
The S&P 500 (^GSPC) built on its 27th record close of the year, rising more than 1.2%. The Nasdaq Composite (^IXIC) rose nearly 1.8%, also adding to a record close from the previous day. The Dow Jones Industrial Average (^DJI) also rose by about 0.5%.
The Consumer Price Index (CPI) remained flat over the previous month and rose 3.3% year-on-year in May – a deceleration from April’s 0.3% month-on-month increase and 3.4% year-over-year increase in prices. Both measures exceeded economists’ expectations. On a “core” basis, which excludes the more volatile costs of food and gas, prices in May rose 0.2% from the previous month and 3.4% from a year ago – lower than April data. Both measures were also better than economists’ estimates.
This has changed market expectations for federal interest rate cuts this year. After the data was released, markets were pricing in a roughly 69% chance that the Federal Reserve would start cutting interest rates by its September meeting. According to CME FedWatch data. This is up from the 53% probability the day before.
The 10-year Treasury yield (^TNX) fell about 14 basis points to 4.26%, its lowest level since April 1. Subsequently, interest rate sensitive areas of the market rose. The Russell 2000 (^RUT) small-cap index rose more than 3.1%.
Read more: How does the labor market affect inflation?
But all that could change later this afternoon. The Fed’s decision is a certainty – the central bank is expected to keep interest rates at their current highest levels in 23 years. Investors will be closely watching the release of the Fed’s updated economic outlook in its “dot chart” — specifically, the number of interest rate cuts it expects for the rest of the year.
Last we heard, in March, the number was three. Policymakers will almost certainly reduce this, thanks in part to the aforementioned flatness of inflation at the beginning of this year. These forecasts, along with what Fed Chairman Jerome Powell said in his press conference, may be the latest market-moving events on an unusually busy day.
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Ark says Telsa could reach $2,600 per share by 2029. Elon Musk calls target ‘attainable’
Tesla (TSLA) stock rose more than 4% on Wednesday, leading to a crucial shareholder vote on CEO Elon Musk’s pay package, which is expected after the bell on Thursday.
Ark Invest published New Tesla research On Wednesday, heading into the vote. The company, led by Cathie Wood, believes Tesla shares could be worth $2,600 per share by 2029.
Wood’s team believes the launch of Tesla’s robotaxi “in the next couple of years” will boost most of the stock’s value.
“ARK estimates that approximately 90% of Tesla’s value and profits will be attributed to its robotics business in 2029,” the report reads. “At the same time, electric vehicles could account for nearly a quarter of total sales and about 10% of Tesla’s potential profits, as we believe the robotaxi business will deliver much higher margins.”
Arc believes in a bullish scenario for Tesla, where robotaxi revenues will amount to nearly 90% of Tesla’s total revenues. Tesla was trading below $180 per share on Wednesday, meaning Ark expects a more than 1,300% increase in shares over the next five years.
CEO Elon Musk Response to research note on XPointing out that this would be “very difficult, but achievable.”
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Apple is regaining its position as the world’s largest stock
Apple (AAPL) stock rose nearly 4% on Wednesday morning, extending gains from its best single-day move in a year on Tuesday.
The move pushed iPhone’s market capitalization higher than Microsoft’s (MSFT), making it the world’s largest stock. Apple’s market cap surpassed $3.3 trillion on Wednesday, surpassing Microsoft’s market cap of $3.25 trillion.
Apple shares rose as investors digested the announcement of its artificial intelligence platform, Apple Intelligence, which some Wall Street analysts welcomed as a potential catalyst to spark the iPhone’s next upgrade cycle.
Here’s a look at the market capitalization, in trillions, of the largest stocks on US markets.
Source: Yahoo Finance -
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Nvidia is like the sun..
Shout out to Apollo’s chief economist, Torsten Slok, for this vital check on the S&P 500.
Nvidia (NVDA) is clearly the sun around which 499 other companies revolve.
Note: Apollo is the parent company of Yahoo Finance.
It’s Nvidia’s market. (Apollo) -
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