The S&P 500 and Nasdaq have hit fresh 2023 highs as Tesla shares jumped following a tie-up with General Motors while investors awaited inflation data and US monetary policy decision due next week.
Tesla Inc shares climbed 5.7 per cent after General Motors agreed to use the company’s Supercharger network.
GM shares rose 3.8 per cent.
The benchmark S&P 500 on Thursday ended 20 per cent above its October 12 closing low, heralding the start of a new bull market as defined by some market participants.
A rally in megacap stocks, a better than expected earnings season and expectations that the Fed was nearing the end of its rate-hiking cycle have supported Wall Street this year despite concerns about a looming recession and sticky inflation.
“The overall tone of the market is based on the idea that the Fed will pause its increases,” said Rick Meckler, partner at Cherry Lane Investments.
“As it pauses, the broader market will start to rally and maybe catch up with the large-cap tech stocks that have led the way up until now.”
Major growth stocks including Apple Inc, Microsoft Corp and Nvidia Corp rose between 0.5 per cent and 2.6 per cent.
Traders anticipate a 72 per cent chance that the US central bank will hold interest rates at the current 5.0 per cent-5.25 per cent range in its June 13-14 policy meeting, according to CMEGroup’s Fedwatch tool.
Consumer prices data on Tuesday will help shape expectations around further moves by the Fed, with traders already pricing in a 50 per cent chance of another 25-basis-point rate hike in July.
“We expect the Fed to hike one last time in this cycle in July. By September, we think weakening activity and employment data will lead toward a more enduring pause, with the Fed holding at 5.5 per cent until its first rate cut in March 2024,” economists at BNP Paribas noted.
Signs of a resilient US economy and hopes of the Fed pausing its aggressive monetary tightening have pushed volatility gauges tumbling.
The CBOE Volatility index, commonly known as Wall Street’s fear gauge, sank to a fresh pre-pandemic level of 13.53 points on Thursday.
In early trading, the Dow Jones Industrial Average was up 56.85 points, or 0.17 per cent, at 33,890.46, the S&P 500 was up 19.56 points, or 0.46 per cent, at 4,313.49, and the Nasdaq Composite was up 122.32 points, or 0.92 per cent, at 13,360.85.
Target Corp slipped 1.3 per cent after Citi downgraded the big-box retailer to “neutral,” saying sales could fall further this year amid a challenging macro backdrop.
Adobe Inc added 5.4 per cent after Wells Fargo upgraded it to “overweight,” saying the Photoshop software maker was poised to benefit from the generative AI boom.
Netflix Inc gained 1.7 per cent following a report that its subscriptions jumped after the streaming giant’s crackdown on password sharing.
Declining issues outnumbered advancers by a 1.36-to-1 ratio on the NYSE while advancing issues outnumbered decliners by a 1.00-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and five new lows while the Nasdaq recorded 45 new highs and 22 new lows.