Nasdaq and S&P 500 Soar to New Heights Amid Inflation Data and Earnings Anticipation

The Nasdaq and S&P 500 reached record highs on Wednesday, driven by gains in major stocks like Nvidia. Investors anticipate key inflation data and quarterly earnings reports this week. The Philadelphia semiconductor index also hit a record high, while U.S. inflation data and potential interest rate cuts loom large.

The Nasdaq and S&P 500 hit record highs on Wednesday, driven by significant gains in Nvidia and other major Wall Street stocks. Investors are keenly awaiting this week's key inflation data and quarterly earnings reports.

This marked the fifth consecutive day of record intraday highs for both indices. The S&P 500 surpassed the 5,600 threshold for the first time due to growing expectations of a September interest rate cut, spurred by Federal Reserve Chair Jerome Powell's recent Congressional testimony. Powell indicated that while he is confident, he is yet to conclude that inflation is stabilizing at the 2% target.

The Philadelphia semiconductor index surged by 2% to a new record after Taiwan Semiconductor Manufacturing Co reported robust quarterly earnings. "TSMC's report bolstered the AI narrative, marking it as a key data point," noted Thomas Martin, senior portfolio manager at Globalt Investments. Both Micron Technology and Nvidia saw substantial rises, with the latter reaching a three-week high. Apple also recorded a historic high, boosting its market value to nearly $3.6 trillion.

Among the 11 sector indexes of the S&P 500, 10 saw gains, led by a 1.24% increase in information technology. Investors, however, are cautious about a potential selloff if top-performing companies fail to meet high earnings expectations. U.S. inflation data, including the Consumer Price Index and Producer Price Index, will be released this week. The probability of a 25-basis-point rate cut by September increased to 74%, based on CME's FedWatch.

The results of the second-quarter earnings season, starting with major banks this Friday, will be crucial in determining the sustainability of the current stock rally. Intuit shares dropped 3% following its layoff announcement, while Illumina shares surged 6.5% on its acquisition plans for Fluent BioSciences.

The S&P 500 saw 27 new highs and 10 new lows, while the Nasdaq posted 54 new highs and 104 new lows.

(With inputs from agencies.)