FX.co ★ Nasdaq, S&P 500 Reach Record Highs On Tamer-Than-Expected Inflation Data

After concluding yesterday's volatile session with gains, stocks continued their upward momentum on Wednesday. The major indexes have all recorded substantial gains, with both the Nasdaq and the S&P 500 achieving new intraday record highs.

Currently, the major indices are slightly off their peak levels of the session. The Nasdaq has risen by 161.60 points, or 1.0%, to 16,672.78. The S&P 500 is up by 45.61 points, or 0.9%, to 5,292.29, and the Dow has gained 278.65 points, or 0.7%, to 39,836.76.

The sustained strength on Wall Street comes after a highly anticipated report from the Labor Department revealed that consumer prices in the U.S. increased by slightly less than expected in April.

The Labor Department stated that its Consumer Price Index (CPI) rose by 0.3% in April, following a 0.4% increase in March. Economists had predicted a 0.4% rise in consumer prices.

Excluding food and energy prices, core consumer prices also increased by 0.3% in April after a 0.4% rise in March. This increase met economists’ expectations.

The report also indicated that the annual growth rate of consumer prices slowed to 3.4% in April from 3.5% in March, in alignment with forecasts.

Similarly, the annual rate of core consumer price growth decelerated to 3.6% in April from 3.8% in March, which also matched estimates.

Following hotter-than-expected producer price inflation data from the previous day, this report has bolstered renewed optimism regarding the outlook for interest rates.

"The CPI print offered a modicum of hope that inflation is cooling, albeit slowly," remarked Quincy Krosby, Chief Global Strategist for LPL Financial.

She added, "The Fed will undoubtedly require a series of cooler reports to adjust its rate easing timeline, but the CPI report suggests that the path towards 2% inflation is slightly less turbulent."

Meanwhile, a separate report from the Commerce Department indicated that retail sales in the U.S. remained flat in April, contrary to expectations.

The Commerce Department disclosed that retail sales were virtually unchanged in April after a downwardly revised 0.6% increase in March.

Economists had anticipated a 0.4% rise in retail sales, compared to the originally reported 0.7% increase for the previous month.

Excluding motor vehicle and parts dealers, retail sales edged up by 0.2% in April after a 0.9% jump in March, matching economists' estimates.

**Sector News**

Computer hardware stocks have exhibited significant upward momentum, propelling the NYSE Arca Computer Hardware Index up by 2.9% to a record intraday high.

Shares of Dell (DELL) surged after Morgan Stanley raised its price target for the company’s stock to $152 from $128, citing it as the "best way to play" the AI infrastructure development.

Housing stocks have also shown considerable strength, reflected by a 2.8% surge in the Philadelphia Housing Sector Index, which has reached its highest intraday level in over a month despite a National Association of Home Builders report showing an unexpected dip in homebuilder confidence in May.

Gold stocks have moved sharply higher alongside the price of the precious metal, with the NYSE Arca Gold Bugs Index jumping by 1.8% to a one-year high.

Other sectors experiencing gains include semiconductor, commercial real estate, and software stocks, whereas airline stocks are among the few groups bucking the positive trend.

**Other Markets**

In overseas trading, stock markets across the Asia-Pacific region ended mixed on Wednesday, with markets in Hong Kong and South Korea closed for holidays.

Japan's Nikkei 225 Index inched up by 0.1%, and Australia's S&P/ASX 200 Index rose by 0.4%, while China's Shanghai Composite Index fell by 0.8%.

In Europe, the major markets have all moved upward. Germany’s DAX Index advanced by 0.8%, and both the U.K.'s FTSE 100 Index and France's CAC 40 Index increased by 0.2%.

In the bond market, treasuries moved notably higher in response to the consumer price inflation data. Consequently, the yield on the benchmark ten-year note, which moves inversely to its price, decreased by 8.4 basis points to 4.361%.