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Nasdaq hits record high as Powell calms rate hike fears, eyes on upcoming CPI

May 15, 2024

Key points

  • Nasdaq closed at a record high driven by optimistic remarks from Fed Chair Jerome Powell and declining Treasury yields.
  • Home Depot shares dip after earnings reveal a focus on smaller home projects, reflecting a shift in consumer spending patterns.

In Tuesday’s trading session, the Nasdaq Composite reached a new record high, climbing to 18356.6 on the VT Markets trading app. This rally came as investors reacted positively to Federal Reserve Chair Jerome Powell’s assurance that the central bank is not planning an imminent rate hike.

This sentiment was bolstered by the producer price index for April showing a rise, surpassing expectations due to increased costs of goods and services. However, Powell highlighted that the index presented a mixed view, with some data revised lower, easing concerns over persistent inflation.

Chart displaying NASDAQ 100 hitting a record high at 18,331.35 with a trend of 0.06%, following comments by Federal Reserve Chair Jerome Powell calming rate hike fears. The chart features moving averages (MA) and MACD indicators, highlighting market dynamics in the context of upcoming Consumer Price Index (CPI) data release. Image hosted by VT Markets, a forex brokerage.

Picture: Nasdaq 100 achieved a new all-time high as seen on VT Markets app.

Investors embrace “higher-for-longer” rates

The S&P 500 also saw gains, adding 0.48% to end at 5,246.68, while the Dow Jones Industrial Average increased by 0.32%, reaching 39,558.11. The positive market movement reflects a growing comfort among investors with the concept of “higher-for-longer” interest rates, particularly as Treasury yields showed a decline, influencing stock prices favorably.

Also read: S&P 500 Rises Despite Mixed Earnings, Higher Bond Yields 

Market awaits CPI report

In the midst of these corporate movements, the broader market is keenly awaiting the Consumer Price Index (CPI) report set for release on Wednesday. This data is critical as it will provide further insights into whether the inflationary pressures seen in the first quarter have persisted into April. This upcoming report could significantly influence the Federal Reserve’s policy decisions moving forward.

Meanwhile, geopolitical tensions have introduced new variables into the market dynamics. President Joe Biden announced significant tariff increases on various Chinese imports, which could have extensive implications for international trade relations and market sectors involved with these goods.

As the market processes these diverse signals—from corporate earnings and central bank cues to geopolitical developments and consumer behavior—the landscape remains dynamic, with multiple factors guiding investor sentiment and market directions.

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