Nasdaq and S&P 500 reach new record highs.
On Wall Street, traders are on a shopping spree, especially in the tech and growth sectors. The reason behind this is the speculation of interest rate cuts, fostered by new information from the US labor market. The interest rate cuts and the rally in tech stocks due to the recent US labor market data have caused Wall Street indices to soar. The S&P 500 and Nasdaq closed at all-time highs on Wednesday. Nvidia's market value surpassed $3 billion for the first time, surpassing Apple and making it the most valuable company in the AI chip industry. The Dow Jones Index of premier companies closed 0.3% higher at 38,807 points. The tech-driven Nasdaq increased by 2% to 17,187 points, and the all-encompassing S&P 500 rose 1.2% to 5,354 points.
In the US, jobs were created at a lower rate than predicted according to a recent survey. The number of job openings also dropped to its lowest level in three years. This intensified speculation among investors that the Federal Reserve will lower interest rates in the fall. "The data suggests that the Fed will reduce rates in September," said Tamas Varga, an analyst at PVM Brokers. Central banks are attempting to control inflation and calm down the overheated job market with strict monetary policy.
This has bolstered the growth stocks. Nvidia continued its rally and closed 5.1% higher at $1,224. The shares have risen by around 145% since the beginning of the year as demand for the company's state-of-the-art processors for AI applications far exceeds the supply. Microsoft gained 1.9% on Wednesday, and Amazon increased by 1.1%. High-interest rates make the essential investments for the growth of technology giants more pricey.
In contrast, Indian stock exchanges partly recouped their losses following the parliamentary elections in the country. The Nifty 50 and BSE indices rose by around 3% each to 22,620 and 74,382 points, respectively, by the end of trading on Wednesday. They had plunged by approximately 6% the day before. "The election result introduces a temporary uncertainty," said analysts at DBS Bank in Singapore. However, it is unlikely that the market will change course until more information is available about the new government's policies. "Given the upcoming government formation, the market is expected to stabilize shortly."
Prime Minister of India, Narendra Modi, has won the parliamentary election for the third time - but with a smaller margin than expected. For the first time since assuming office as Prime Minister in 2014, Modi will now rely on at least three regional parties, the reliability of which in recent years has not always been dependable. The Indian stock market will remain unstable until there is greater clarity about the policies of the new government, said Neeraj Dewan of Quantum Securities in New Delhi.
Chipmaker Intel was a sought-after stock in the US due to its partnership with private equity firm Apollo Global Management.
The shares of discount store Dollar Tree fell by 4.9% following an uninspiring forecast. The entire sector is grappling with weak demand due to high inflation and competition from retail giants like Walmart, Target, and the Chinese online shopping platform Temu. Dollar Tree's retail chain Family Dollar has also been under pressure in recent months due to the decrease in government benefits for low-income customers. The company itself is mulling over the likelihood of selling the struggling division.
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Traders on Wall Street have been actively engaging in share trading, particularly in tech and growth sectors, due to the expectation of interest rate cuts, sparked by recent US labor market data. This speculation has led to a surge in share prices, with the S&P 500 and Nasdaq reaching new record highs, alongside the Dow Jones Index's slight increase.
The positive sentiment towards tech stocks, fueled by the potential interest rate cuts and the US labor market data, has also contributed to Nvidia's market value surpassing $3 billion for the first time, making it the most valuable company in the AI chip industry.
