S&P 500 And Nasdaq Hit New Records As Rate Cut Hopes Persist

On Tuesday, both the S&P 500 and Nasdaq Composite achieved fresh record closes, marking their sixth consecutive day of gains amid sustained optimism about potential interest rate cuts following Federal Reserve Chair Jerome Powell’s congressional testimony.

The S&P 500 (^GSPC) eked out a slight gain to notch its 36th record close of the year, while the Nasdaq Composite (^IXIC) edged up approximately 0.1%, building on its previous record. Meanwhile, the Dow Jones Industrial Average (^DJI) fluctuated throughout the day before closing down around 0.1%.

Investor sentiment remains buoyant as signs of a slowdown in the US economy strengthen expectations for rate cuts. Powell, addressing the Senate, expressed cautious optimism about inflation trends, highlighting the need for further positive economic data to solidify the Federal Reserve’s confidence in achieving its 2% inflation target.

Market participants are increasingly betting on two rate cuts by the Fed this year, with September emerging as a likely timeframe. Analysts, including Ryan Sweet from Oxford Economics, emphasized growing confidence in this forecast amid ongoing economic assessments and upcoming inflation data releases.

Powell’s appearance before the House on Wednesday and the subsequent release of consumer inflation updates on Thursday are poised to provide further insights and potential market catalysts.

However, amidst the market’s bullish stance, some cautionary notes have surfaced, with discussions of a possible summer pullback gaining traction. Morgan Stanley’s Mike Wilson notably called for a 10% correction, underscoring underlying uncertainties despite the current market highs.