S&P 500, Nasdaq near record highs on rate cut hopes; Big Tech stocks weaken
Signs that U.S. tariffs on imports have not fully filtered into headline consumer prices came as a relief for investors this week as they scour for insight on the impact of trade uncertainty on the economy.
Some large technology stocks including Nvidia (NVDA.O), opens new tab, Alphabet (GOOGL.O), opens new tab and Microsoft (MSFT.O), opens new tab - among the so-called Magnificent Seven stocks - were lower as investors searched for new growth drivers.
"Valuations are elevated. I do think, though, at the end of the day, the key will be the delivery of earnings, and that's what we're seeing," said Katherine Bordlemay, co-head of client portfolio management, fundamental equities at Goldman Sachs Asset Management.
She said the dispersion of stock-level returns in the U.S. is at one of the higher levels of the last 30 years.
At 2:23 p.m. EDT, the Dow Jones Industrial Average (.DJI), opens new tab rose 391.83 points, or 0.88%, to 44,850.44, the S&P 500 (.SPX), opens new tab gained 12.63 points, or 0.19%, to 6,458.25 and the Nasdaq Composite (.IXIC), opens new tab gained 22.78 points, or 0.11%, to 21,704.69.
The blue-chip Dow was within 1% of an all-time high and the Russell 2000 index (.RUT), opens new tab, which tracks rate-sensitive small-cap companies, added 1.4% to hit a six-month high.
Traders are now fully pricing in a 25 basis-point interest rate cut, according to the CME's FedWatch Tool. The central bank last lowered borrowing costs in December.
Treasury Secretary Scott Bessent said on Wednesday he thought an aggressive half-point cut was possible, given recent weak employment numbers.
Investors were also taking notice of other sectors following the recent tech-led rally in U.S. stocks that has pushed valuations of the S&P 500 above long-term averages.
Healthcare stocks (.SPXHC), opens new tab, which have been beaten down for much of the year, led gains among the 11 S&P 500 sectors, with a 1.2% rise.
Chicago Federal Reserve President Austan Goolsbee said on Wednesday the U.S. central bank is grappling with understanding whether tariffs will push up inflation just temporarily or more persistently, which would inform its decision on when to cut interest rates.
CoreWeave (CRWV.O), opens new tab, which is backed by Nvidia (NVDA.O), opens new tab, slumped 17% after the AI data center operator reported a bigger-than-expected quarterly net loss.
Eyes were also on developments surrounding the China revenue-sharing deal the U.S. government signed with top chipmakers, which the White House said could be expanded to others in the sector.
Paramount Skydance (PSKY.O), opens new tab jumped 38%. The company won exclusive broadcasting rights to the Ultimate Fighting Championship for seven years earlier this week.
In geopolitics, traders were keen on a meeting between U.S. President Donald Trump and Russian President Vladimir Putin on the war in Ukraine, scheduled on Friday.
Advancing issues outnumbered decliners by a 3.18-to-1 ratio on the NYSE. There were 549 new highs and 47 new lows on the NYSE.
On the Nasdaq, advancing issues outnumbered decliners by a 2.27-to-1 ratio.
The S&P 500 posted 37 new 52-week highs and two new lows while the Nasdaq Composite recorded 140 new highs and 55 new lows.
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