Stocks climbed on Wednesday following positive economic data that increased confidence in the Federal Reserve’s ability to reduce inflation without triggering a recession. The S&P 500 reached a new peak for 2023, rising 0.74% to 4,472.16. The Dow Jones Industrial Average gained 0.25% to finish at 34,347.43. The tech-heavy Nasdaq Composite jumped 1.15% to 13,918.96. Both the S&P 500 and Nasdaq ended at their highest closing levels since April 2022, buoyed by optimism that the Fed can achieve a “soft landing” with interest rate hikes.
Bank stocks surged on Wednesday, with Citigroup and Goldman Sachs climbing 1.8% and 1.7% respectively. Regional banks like Comerica (up 3.1%) and Zions Bancorporation (up 2.8%) also saw gains.
The rises came after June CPI data showed inflation rising 3% year-over-year and 0.2% month-over-month – lower than expected. Core CPI also increased less than forecast. This suggests the Fed’s rate hikes are slowing inflation as intended.
Experts like Megan Horneman caution inflation in services, wages, and housing remains high, so more moderation is needed before the Fed can cut rates. Markets are pricing in a 92% chance of a July rate hike. More inflation data in Thursday’s PPI report could provide additional clues on the Fed’s next moves.
