Stocks closed at a fresh all-time high as tech rallied, with Treasury yields sinking on bets the Federal Reserve will cut rates this year amid signs of disinflation. The S&P 500 notched a fourth straight record, reaching its 29th this year, with Adobe Inc. soaring on a strong outlook. Treasuries climbed, with 10-year yields breaking below 4.3%, and a $22 billion sale of US 30-year bonds saw strong demand.
The producer price index unexpectedly declined the most in seven months, indicating that inflationary pressures are moderating. This data has led analysts to believe that the Fed may begin making an interest rate cut later this year. Bill Adams at Comerica Bank forecasts Fed reductions in September and December.
The technology rally continued, with Tesla Inc. jumping after Elon Musk said shareholders backed his compensation package. Chipmakers also saw a rally, led by Broadcom Inc. after announcing solid earnings and a 10-for-1 stock split. GameStop Corp. climbed as Keith Gill, known as “Roaring Kitty,” posted on X.
Traders are closely watching the macroeconomic picture, with the PPI report coming on the heels of a soft reading on consumer prices. US officials have penciled in just one interest-rate cut this year, with more cuts expected for 2025. The Fed’s favored inflation gauge is set for the smallest advance since November, reinforcing the case for two interest-rate cuts this year.
Corporate highlights include Boeing Co. inspecting undelivered 787 Dreamliners due to incorrectly installed fasteners, Ford Motor Co. expanding its electric vehicle lineup, Snowflake Inc. closing its investigation into a hacking campaign, John R. Tyson being suspended from his role as CFO of Tyson Foods Inc. after a drunken driving charge, and the US Supreme Court siding with Starbucks Corp. over the National Labor Relations Board.
Overall, the US stock market is expected to continue its strong performance into the second half of 2024, with solid earnings, the end of the Fed’s monetary-tightening campaign, and economic strength lifting equities in the coming months. Analysts recommend buying large-cap shares and a mix of value and growth stocks.
