Major United States benchmark averages extended their upward momentum on Wednesday (Thursday AEST), with the Dow Jones Industrial Average recording another strong gain while the S&P 500 and Nasdaq Composite closed at fresh record highs for the second consecutive session.
The Dow climbed 463.7 points, or 1%, to end at 44,922.3. The S&P 500 added 20.8 points, or 0.3%, to close at 6,466.6, while the Nasdaq Composite advanced 31.2 points, or 0.1%, to 21,713.1.
Wednesday’s advance followed a record-setting session on Tuesday, which was sparked by a softer-than-expected U.S. consumer inflation reading.
The data bolstered hopes of a Fed rate cut as soon as September, with traders assigning a 94.3% probability to such a move, according to the CME Group FedWatch Tool.
Investor positioning reflected a rotation out of the megacap “Magnificent Seven” technology names into smaller companies, with the Russell 2000 index jumping 2%.
Small-cap stocks tend to benefit disproportionately from lower borrowing costs, as reduced interest rates can improve access to capital and potentially lift consumer spending.
Markets are now looking ahead to Thursday’s producer price index (PPI) report, which will provide additional insight into wholesale inflation trends.
The data will precede the Fed’s closely watched annual Jackson Hole symposium from 21–23 August, a gathering that could influence market expectations for the central bank’s policy direction in the months ahead.
On the bond markets, yields moved lower, with the benchmark 10-year Treasury yield falling 1.2% to 4.236% and the 2-year yield down 1.5% to 3.679%.
