The S&P 500 and Nasdaq closed at fresh record highs on Wednesday as investors piled back into artificial intelligence-related technology stocks, brushing aside concerns over stubbornly high US inflation and the growing likelihood of prolonged elevated interest rates.
Chipmakers led the rebound after weakness in the previous session, helping both indexes reverse earlier losses. Six of the so-called Magnificent Seven technology giants gained between 1.4% and 3.9%, while Nvidia rose 2.3% and Tesla added 2.7%.
The Dow Jones Industrial Average slipped 67.36 points, or 0.14%, to 49,693.20. Meanwhile, the S&P 500 climbed 43.29 points, or 0.58%, to 7,444.25, while the Nasdaq Composite surged 314.14 points, or 1.20%, to finish at 26,402.34.
“In the face of continued hot inflation data, technology remains resilient,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “And after some weakness yesterday, the chip stocks came soaring back today.”
Investor sentiment remained cautious after fresh US producer price data showed inflation rose 1.4% in April, marking the biggest monthly increase in four years. The jump was largely linked to supply disruptions following the closure of the Strait of Hormuz, which pushed oil prices sharply higher.
The latest inflation figures further dampened hopes for a near-term interest rate cut from the Federal Reserve. Boston Fed President Susan Collins said a rate hike could still be possible if inflation pressures persist.
“I would just be careful to not overlook the risk of a more prolonged period of inflation and elevated interest rates,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Michigan.
Meanwhile, US President Donald Trump arrived in Beijing for a two-day summit with Chinese President Xi Jinping, accompanied by business leaders including Elon Musk and Jensen Huang.
“President Trump took almost a small army with him to meet with the Chinese leaders and President Xi,” Detrick said. “With all the negative news about Iran, he wants to walk away from this meeting in China with potentially some significant deals.”
Elsewhere, Ford Motor Company jumped 13.2% after Morgan Stanley highlighted the carmaker’s energy business and partnership with Chinese battery giant CATL as a key competitive advantage.
Reuters
