CEO Morning Brief

Nasdaq Crosses 17,000 Mark Ahead of Inflation Test

Publish date: Wed, 29 May 2024, 10:51 PM
TheEdge CEO Morning Brief

(May 29): The Nasdaq breached the 17,000 level for the first time on Tuesday, buoyed as AI darling Nvidia jumped to a record high, even as focus shifted to key inflation data later in the week that could sway expectations for the Federal Reserve's rate-cut path.

Nvidia's gains lifted its fellow chip stocks, with the Philadelphia Semiconductor Index up 1.7% as traders returned from a holiday-extended weekend.

The Dow lagged other indexes as healthcare and financial stocks dragged. Healthcare also led the S&P 500 subsector losses, weighed by an 8% drop in Moderna.

The possibility that the world's most influential central bank could kick off interest-rate cuts this year has sent Wall Street on a record-breaking rally since late 2023, with the Nasdaq and S&P 500 marking their fifth straight week of gains on Friday.

However, expectations for the timing of rate cuts have seesawed, with policymakers wary as the data still reflects sticky inflation.

Market attention now shifts to the US core Personal Consumption Expenditures Price Index report for April later in the week. The Fed's preferred inflation barometer is expected to hold steady on a monthly basis.

"There has been an emerging acceptance by the investment community that it is unlikely that the Fed will lower rates in 2024. As we anticipate the next economic data, investors will be looking to see if those results will reinforce the changing opinion that there will be no rate cuts this year," said Peter Andersen, founder of Andersen Capital Management.

Odds of a rate reduction of at least 25 basis points stand above the 50% mark only for the months of November and December this year, according to the CME FedWatch Tool.

US trading moves to a shorter settlement on Tuesday, which regulators hope will reduce risk and improve efficiency, but is expected to temporarily increase transaction failures for investors.

Minneapolis Fed president Neel Kashkari said in an interview with CNBC that the US central bank should wait before cutting interest rates, adding that it could potentially even hike rates if inflation does not fall further.

At 11:29am the Dow Jones Industrial Average fell 130.37 points, or 0.33%, to 38,939.22, the S&P 500 gained 3.92 points, or 0.07%, to 5,308.64 and the Nasdaq Composite gained 87.15 points, or 0.52%, to 17,008.27.

UBS Global Research raised its year-end target for the benchmark index to 5,600 from an earlier projection of 5,400, marking the highest forecast among major brokerages.

Apple rose nearly 0.9% after iPhone sales in China surged 52% in April from a year earlier, Reuters calculations based on industry data showed.

Shares of United States Cellular rose 3% after T-Mobile said it would buy almost all the regional carrier's wireless operations in a US$4.4 billion (RM20.6 billion) deal.

GameStop shot up 24% after the videogame retailer said late on Friday it had raised US$933 million by selling 45 million shares as part of an "at-the-market" offering.

Advancing issues outnumbered decliners by a 1.12-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq.

The S&P 500 posted 23 new 52-week highs and eight new lows, while the Nasdaq Composite recorded 75 new highs and 61 new lows.

Source: TheEdge - 29 May 2024

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