By Sruthi Shankar and Shristi Achar A
(Reuters) – The S&P 500 and Nasdaq hit fresh 2023 highs on Friday before paring some gains, as a jump in Tesla and technology stocks outweighed jitters around the Federal Reserve’s policy outcome and inflation data next week.
Tesla Inc shares climbed 4.9% and were set for their longest winning streak since January 2021, after General Motors agreed to use the company’s Supercharger network. GM shares rose 2.5%.
The benchmark S&P 500 closed Thursday 20% above its Oct. 12 finishing low, heralding the start of a new bull market as defined by some market participants.
A rally in megacap stocks, 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.”
Shares in tech companies including Apple Inc, Microsoft Corp, Advanced Micro Devices and Nvidia Corp rose between 0.3% and 3.2% after retreating earlier this week.
Traders see a 72% chance of the U.S. central bank holding interest rates at the current 5%-5.25% 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% chance of another 25-basis-point rate hike in July.
“Some of what has been supporting equities is resilient economic data. But to the extent that inflation remains elevated, the Fed may have to do a little bit more,” said Roosevelt Bowman, senior investment strategist at Bernstein Private Wealth Management.
The CBOE Volatility index, commonly known as Wall Street’s fear gauge, edged up after sinking to a fresh pre-pandemic level of 13.53 points on Thursday.
At 12:04 p.m. ET, the Dow Jones Industrial Average was down 9.22 points, or 0.03%, at 33,824.39, the S&P 500 was up 3.26 points, or 0.08%, at 4,297.19, and the Nasdaq Composite was up 18.88 points, or 0.14%, at 13,257.41.
Target Corp slipped 2.0% after Citi downgraded the big-box retailer to “neutral”, saying sales could fall further this year amid a challenging macro backdrop.
Adobe Inc added 4.5% after Wells Fargo upgraded it to “overweight”, saying the Photoshop software maker was poised to benefit from the generative AI boom.
Netflix Inc gained 2.5% following a report that its subscriptions jumped after the streaming giant’s crackdown on password sharing.
Declining issues outnumbered advancers by a 1.56-to-1 ratio on the NYSE and a 1.61-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and five new lows, while the Nasdaq recorded 69 new highs and 32 new lows.
(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi)