The S&P 500 index closed at a record high of 5,308.15 on Wednesday, May 17th, 2024. This marked the first time the broad market index ended a trading session above 5,300. The S&P 500’s 1.17% gain was driven by economic data that came in below economists’ expectations.
The Nasdaq Composite also reached a new record close of 16,742.39, up 1.40% on the day. The Dow Jones Industrial Average increased by 349.89 points, or 0.88%, to close at 39,908.00 – another all-time high.
For 2024 year-to-date, this represents the 23rd record close for the S&P 500, the 18th for the Dow, and the 8th for the Nasdaq Composite.
The rally was sparked by the April U.S. consumer price index (CPI) report released on Wednesday morning. The CPI rose 0.3% for the month, lower than the Dow Jones estimate of a 0.4% increase. On an annual basis, CPI was up 3.4% year-over-year, matching expectations.
The core CPI, which excludes volatile food and energy prices, saw both its monthly and yearly increases come in precisely as estimated by economists.
A separate economic report showed U.S. retail sales were flat in April, missing projections of a 0.4% rise.
Following these inflation and spending data points, traders raised their bets on the Federal Reserve cutting interest rates in the coming months. According to the CME FedWatch Tool, fed funds futures trading priced in a 75.3% probability of a rate cut by the Fed’s September meeting. On Tuesday, the odds were just 65.1%.
In the equity market, several major tech names led the gains on hopes lower rates will boost growth stocks. Nvidia shares jumped 3.6%, while Apple rose 1.3% and Microsoft added 1.2%.
Yields on U.S. Treasury securities declined in the wake of the economic releases. The rate on the 10-year Treasury note fell around 10 basis points to 4.344%. The 2-year Treasury yield dropped roughly 9 basis points to 4.726%.
Despite last month’s stumble amid worries over persistent inflation pressures, the S&P 500 is now up over 11% for 2024 so far. Market sentiment has been buoyed by expectations of Fed rate cuts and optimism that advances in artificial intelligence can drive corporate profits higher.