Technology Megacaps Lead Stock Gains as Bond Yields Fall – US Market Wrap

A rally in big tech pushed stocks closer to an all-time high as bond yields fell, with traders looking for key inflation data to predict the Federal Reserve’s next moves.

In the run-up to the consumer price index, Wall Street ignored a mixed reading on producer inflation and Jerome Powell’s signals that interest rates will remain higher for longer. The S&P 500 was just a few points away from breaking its record, with Tesla and Nvidia leading gains among the “Magnificent Seven” megacaps. Meme-stock traders have once again piled into GameStop and AMC Entertainment Holdings.

Underlying US inflation likely moderated in April for the first time in six months, providing a ray of hope that price pressures will begin to ease again following a string of positive surprises. The core CPI is expected to rise 3.6% from April 2023. While the annual increase would be the smallest in three years, it would still be too high to justify rate cuts.

The S&P 500 index finished near 5,247. It would need to surpass the March 28th closing level of 5,254.35 to set its 23rd record of the year. Treasury 10-year yields fell four basis points, to 4.45%.

The producer price index for final demand rose 0.5% from a month ago, boosted primarily by services and following a downwardly revised 0.1% drop in March. The PPI increased the most since April 2023 when compared to the previous year. Several categories used to calculate the personal consumption expenditures price index were simplified.