The S&P 500 closed above 5,500 for the first time ever on Tuesday, driven by optimism over inflation progress and strong corporate performances. Federal Reserve Chair Jerome Powell’s comments on the disinflationary path of the economy further boosted investor sentiment, leading to record highs in major indices.
Key Takeaways
- S&P 500 closed at 5,509, marking its first-ever close above 5,500.
- Nasdaq Composite also hit a record high, closing at 18,028.
- Federal Reserve Chair Jerome Powell highlighted progress in reducing inflation.
- Tesla shares surged 10% after better-than-expected Q2 deliveries.
- Job openings increased to 8.14 million in May, indicating a resilient labor market.
Market Performance
The S&P 500 added more than 0.6% to close at 5,509, while the tech-heavy Nasdaq Composite gained 0.8% to close at 18,028. The Dow Jones Industrial Average also rose by 0.4%. The rally was largely driven by gains in megacap tech stocks, with Tesla, Amazon, Apple, and Alphabet all seeing significant increases.
Powell’s Comments on Inflation
Federal Reserve Chair Jerome Powell expressed optimism about the recent economic data, noting that the latest inflation readings suggest the economy is on a disinflationary path. However, he emphasized that more evidence is needed before the central bank considers cutting interest rates. Powell’s comments came during a panel discussion in Portugal for a European Central Bank conference.
Labor Market Resilience
New data from the Bureau of Labor Statistics showed that job openings increased to 8.14 million in May, up from 7.92 million in April. This unexpected rise indicates that the labor market remains resilient despite concerns over softer economic data. The job openings rate also ticked higher to 4.9% from 4.8% the previous month.
Corporate Highlights
Tesla shares surged by 10% after the company reported better-than-expected vehicle deliveries for the second quarter. The electric vehicle maker delivered 443,956 vehicles, surpassing analyst expectations. Other tech giants like Amazon, Apple, and Alphabet also saw their shares rise by more than 1%.
Economic Outlook
Wall Street is cautiously optimistic about the upcoming earnings season, with expectations of a 9% year-over-year growth in earnings for the second quarter. However, strategists warn that the market’s high valuation and elevated investor sentiment could lead to a more muted rally following earnings reports.
Oil Prices and Other Market Movers
Oil prices remained near a two-month high due to concerns over Hurricane Beryl and ongoing tensions in the Middle East. West Texas Intermediate crude topped $83 per barrel, while Brent crude hovered above $86 per barrel. In other news, Paramount Global shares rose nearly 8% amid speculation of a potential bid by billionaire Barry Diller.
Conclusion
The S&P 500’s milestone close above 5,500 marks a significant achievement for the stock market, driven by positive economic data and strong corporate performances. However, investors remain cautious as they await further evidence of sustained economic growth and inflation control.