July 21, 2024

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U.S. Stocks Rally Ahead Of Close Watched Inflation Data

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Following the lackluster performance seen in the previous session, stocks moved sharply higher over the course of the trading day on Wednesday. With the strong upward move, the S&P 500 closed above 5,600 for the first time ever.

The major averages saw further upside going into the close, ending the day near their highs of the session. The Nasdaq surged 218.16 points or 1.2 percent to 18,647.45, the Dow shot up 429.39 points or 1.1 percent to 39,721.36 and the S&P 500 jumped 56.93 points or 1.0 percent to 5,633.91.

The rally on Wall Street was partly due to strength among technology stocks, as reflected by the notable advance by the tech-heavy Nasdaq, which also reached a new record closing high.

The strength among tech stocks came after Taiwan Semiconductor (TSM) reported its second quarter sales surged much more than expected.

Shares of Taiwan Semiconductor, which supplies chips for AI giants like Nvidia (NVDA) and Apple (AAPL), spiked by 3.5 percent.

Stocks may also have benefitted from optimism about the outlook for interest rates ahead of the release of closely watched consumer price inflation data on Thursday.

Economists expect the annual rate of consumer price growth to slow to 3.1 percent in June from 3.3 percent in May, while the annual rate of core consumer price growth is expected to hold at 3.4 percent.

During congressional testimony, Federal Reserve Chair Jerome Powell said more “good data” would strengthen the central bank’s confidence inflation is moving sustainably toward its 2 percent target and lead to a potential interest rate cut.

Powell also warned of the risk that leaving interest rates at an elevated level for too long could jeopardize economic growth.

“In light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”

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2024-07-10 16:12:07

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