The S&P 500 index made another jump, closed at the highest time for another session and broke through the 5,400-point barrier for the first time in its history, after its announcement Federal Reserve but also the May inflation data showing a slight reduction in pressures. Apparently, the market still believes there will be two rate cuts this year, despite the more dovish tone of the Fed, whose forecasts suggest only one cut.
The index strengthened by 0.85% to close at 5,421.01 points, while the Nasdaq recorded gains of 1.53% to end at 17,608.44 points. Both the S&P 500 and the Nasdaq hit intraday all-time highs and closed at record highs in the current session. However, the Dow Jones decreased slightly by 0.09% to 38,712.21 points.
The Fed kept interest rates unchanged, as expected. The central bank indicated that there was progress on the inflation front, saying that “in recent months there has been some progress towards the 2% target”.
However, the Fed’s latest forecasts suggest that the central bank just saw a rate cut for this year, compared to the three he predicted at the beginning of 2024.
The consumer price index data announced earlier for May showed a slight decrease to 3.3% from 3.4% in April, while the structural price was also lower than expected at 3.4% from 3.5 % inflation, excluding energy and food prices.
“The inflation data softened the Fed’s hawkish tone,” said Jay Hatfield, founder and chief investment officer of InfraCap. “Most investors believe that the economy is slowing down and they need to cut interest rates. Because of this, the market quickly dissolved the aggressive tone of the Fed for a rate reduction,” he added. Immediately after the Fed, the yield on the US 10-year Treasury note fell below 4.3%.