The Dow stood out as the top performer among the three major indexes on Wednesday. This surge was led by gains in pharmaceutical giant Merck. Investors kept a keen eye on the upcoming inflation data and commentary from Federal Reserve policymakers, seeking clues about the future trajectory of interest rates.
Merck & Co (MRK.N) saw a notable increase of 4.77%, making it the biggest contributor to the Dow’s gains. This surge followed the approval by the U.S. Food and Drug Administration of Merck’s therapy for adults afflicted by a rare lung condition.
The Dow, comprising blue-chip stocks, is currently hovering around 1% below the significant milestone of 40,000 points, which it has never reached before.
On the other hand, gains on the Nasdaq, known for its tech-heavy composition, were tempered by the decline of AI powerhouse Nvidia (NVDA.O), which registered a 2.59% loss. This marked Nvidia’s second consecutive decline, although its shares still boasted an impressive year-to-date increase of over 80%.
Despite recent reports indicating higher-than-anticipated inflation in both consumer and producer prices, market sentiment remained largely unfazed. Investors maintained their expectations of a Federal Reserve interest rate cut, with projections suggesting a reduction of at least 25 basis points in June.
The Federal Reserve maintained its outlook for three interest rate cuts this year during its policy meeting last week, a stance that Fed officials have reaffirmed through their comments this week.
The release of the Personal Consumption Expenditures Price Index (PCE), the preferred inflation measure of the Fed, is scheduled for Good Friday, coinciding with the closure of the U.S. stock market.
“We’re currently situated between these data-heavy milestones, and the market is behaving largely as expected in this interim period. We observe equities mostly maintaining their positions, with some minor weakness, likely attributed to quarter-end rebalancing,” remarked Craig Fehr, head of investment strategy at Edward Jones in St. Louis.
“However, the market’s attention is firmly fixed on significant data points such as inflation, Fed policy decisions, and the state of the labor market.”
Later in the day, Fed Board Governor Christopher Waller is set to deliver a speech at the Economic Club of New York.
The Dow Jones Industrial Average (.DJI) climbed 307.35 points, or 0.77%, to reach 39,584.13. The S&P 500 (.SPX) gained 23.92 points, or 0.46%, closing at 5,227.50, while the Nasdaq Composite (.IXIC) increased by 35.50 points, or 0.22%, ending the session at 16,351.19.
All three major U.S. stock indexes were set for quarterly gains, with the S&P poised for its most substantial first-quarter percentage increase since 2019.
According to the CME FedWatch Tool, traders perceive a 70.4% probability that the Federal Reserve will initiate its easing cycle in June.
Nine out of the 11 major S&P 500 sectors were experiencing gains, with rate-sensitive utilities and real estate leading the pack as bond yields saw a decline.
In individual stock movements, Trump Media & Technology Group surged by 14.16% following its impressive debut on the Nasdaq the previous day.
However, GameStop tumbled by 14.77% after the video game retailer reported a decrease in fourth-quarter revenue and announced job cuts as part of cost reduction measures.
On the NYSE, advancing issues outnumbered decliners by a ratio of 3.43-to-1, while on the Nasdaq, advancing issues outnumbered decliners by about 2.43-to-1.
The S&P 500 index achieved 43 new 52-week highs with no new lows, while the Nasdaq recorded 131 new highs and 72 new lows.
