Tuesday saw a significant increase in U.S. stocks, with the S&P 500 closing at a new high as Oracle shares rose and consumer pricing data failed to depress investors’ expectations of an interest rate reduction in the near future.
A day after Oracle announced positive quarterly results and stated it would jointly announce with Nvidia, the maker of artificial intelligence chips, its shares shot up 11.7% to a record high.
A two-day losing run was ended by the 7.2% gain in Nvidia shares and the 2.1% increase in the semiconductor index, which opens a new tab.
The Consumer Price Index (CPI) increased 0.4% in February following a 0.3% increase in January, according to data from the Labor Department. Consumer prices rose 0.4% in February after increasing by the same amount in January, when volatile food and energy components were excluded.
“Investors have gotten comfortable with the notion that it’s not about when the Fed will lower rates but rather by how much, and a delay – whether it happens in May like many were initially hoping or in September— ultimately doesn’t matter,” said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut.
“It’s that they will and that a less restrictive environment is coming.”
The CME FedWatch Tool indicated that traders now expect a 70% possibility of the first rate decrease occurring in June, as opposed to 71% ante of the inflation report.
The Dow Jones Industrial Average reached 39,005.4, up 235.74 points, or 0.61%, from the previous close. The Nasdaq Composite opened a new page, adding 246.36 points, or 1.54%, at 16,265.64, while the S&P 500 gained 57.3 points, or 1.12%, at 5,175.24.
“If you look at economic data, it continues to be pretty strong,” Pursche stated. “And from my perspective as a consumer, employee, and investor, I’d rather have a strong economy and slightly elevated interest rates than a weak economy that requires stimulus.”
Data on producer prices is expected later this week.
The shares of Boeing, which opened a new tab, experienced a 4.3% decline. In an email to staff on Tuesday, Boeing announced that in an effort to lower quality issues, it will be doing additional equipment audits and weekly compliance inspections for each 737 production work area.
Boeing production has been reduced by the US Federal Aviation Administration in the wake of a mid-air panel explosion on a new Alaska Airlines 737 MAX 9 aircraft on January 5.
Additionally, American carriers issued a warning, stating that delays in Boeing jet deliveries cast doubt on their plans to expand capacity.
Southwest Airlines’ stock was down 14.9%, opening a new tab.
The volume of shares traded on U.S. exchanges was 10.97 billion, which was lower than the average of 12.07 billion for the entire session for the previous 20 trading days.
On the NYSE, advancing issues outweighed decliners by a ratio of 1.28 to 1; on Nasdaq, the ratio favored decliners by a ratio of 1.20 to 1.
The Nasdaq Composite recorded 59 new highs and 118 new lows, while the S&P 500 recorded 48 new 52-week highs and no new lows.