The Nasdaq surged past the 17,000 mark for the first time on Tuesday, driven by a record high from AI favourite Nvidia. Attention is now turning to key inflation data due later in the week, which could influence expectations for the Federal Reserve’s rate-cut plans.
Nvidia’s rise also boosted other chip stocks, with the Philadelphia Semiconductor Index climbing 1.7% as traders returned from a long weekend.
Meanwhile, the Dow lagged behind other indexes, weighed down by declines in healthcare and financial stocks. The healthcare sector also led the S&P 500 subsector losses, primarily due to an 8% drop in Moderna.
Speculation that the Federal Reserve might initiate interest rate cuts this year has fueled a record-breaking rally on Wall Street since late 2023. Both the Nasdaq and S&P 500 logged their fifth consecutive week of gains on Friday.
However, the timing of potential rate cuts remains uncertain, with policymakers cautious due to persistently high inflation.
All eyes are now on the upcoming US core Personal Consumption Expenditures Price Index report for April, the Fed’s preferred inflation gauge, which is expected to remain steady on a monthly basis.
Peter Andersen, founder of Andersen Capital Management, commented: “There is a growing consensus among investors that the Fed is unlikely to lower rates in 2024. As we await the next set of economic data, investors will be keen to see if the results support the shifting view that rate cuts won’t happen this year.”
