Traders work on the floor at the New York Stock Exchange.
Brendan Mcdermid | Reuters
The S&P 500 and the Nasdaq Composite rose to fresh closing records on Tuesday, led upward by Apple as the iPhone maker surged to an all-time high.
The broad market index gained 0.27%, closing at 5,375.32, while the Nasdaq Composite added 0.88% to end at 17,343.55. Both indexes also leapt to fresh all-time highs during the day. On the other hand, the 30-stock Dow Jones Industrial Average lost 120.62 points, or 0.31%, to end at 38,747.42.
On Tuesday, investors appeared to be taking profits in artificial intelligence star Nvidia and rotating into emerging AI play Apple, which just unveiled new features that could spark a wave of iPhone upgrades, analysts said. The iPhone maker hit a record during the session — its first since last December — jumping nearly 7.3%. Nvidia lost 0.7%.
The Federal Reserve began its two-day policy meeting on Tuesday. It will conclude on Wednesday with an interest rate policy decision and a subsequent press conference featuring Fed Chair Jerome Powell. Although some indicators show signs of a slowing economy, investors have grown increasingly concerned this will not be enough to incentivize the U.S. central bank to cut rates in 2024.
Marko Kolanovic, JPMorgan’s top equity strategist, warned the chances of a rate cut have decreased following the stronger-than-expected May jobs report. “We see diminished prospects for easing this year, and now expect the first Fed cut only in November,” he wrote.
Fed funds futures were indicating no chance of a cut at this week’s meeting or at the following one in July, according to CME’s FedWatch Tool. However, it’s a coin toss whether the central bank will lower rates in September. Investors are also pricing in a 66% chance of a rate cut in November.
“Overall, the market has begun to prepare a bit for a little bit of a hawkish message from the Fed — not necessarily that they’re going to raise rates, but just that it’ll take longer to bring rates down,” said Bill Merz, head of capital markets research at U.S. Bank Wealth Management.
He added that the key focal points for markets at this meeting will be the Fed’s dot plot and summary of economic projections. Before the Fed decision on Wednesday, investors will also closely follow the consumer price index reading for May.