The Nasdaq Composite made a historic leap, closing above the 20,000 benchmark for the first time on Wednesday, with markets evaluating newly released data that indicates consumer inflation is on the rise, aligning with expectations from Wall Street. This significant milestone was driven by the tech-heavy index's impressive performance, which surged by 1.8%, closing at 20,034.9.
In contrast, the S&P 500 saw a modest increase of 0.8%, reaching 6,084.2, while the Dow Jones Industrial Average experienced a slight decline of 0.2%, finishing at 44,148.6. Among the sectors, communication services led the gainers, while health care saw the largest drop. In recent economic updates, it was reported that the U.S.
consumer price index (CPI) rose by 0.3% in November, marking an increase from the 0.2% recorded in the months prior. Year-on-year, inflation has accelerated to 2.7%, up from October's figure of 2.6%. Both inflation measurements were consistent with projections outlined in a recent Bloomberg survey. TD Economics noted, "The November CPI report provided further evidence that inflation progress is becoming much more incremental, suggesting the Federal Reserve's fight of returning to 2% inflation is far from over." Market sentiment shifted as the likelihood of a 25-basis-point reduction in interest rates next week soared to nearly 99% on Wednesday, up from 89% just a day earlier, as indicated by the CME FedWatch tool. Looking ahead, the official producer prices report for November is anticipated to be released on Thursday.
Meanwhile, mortgage applications within the U.S. continue to show positive momentum, aided by increased refinance activity, as rates across various loan types declined, according to the Mortgage Bankers Association. In bond market movements, the U.S. 10-year yield rose by five basis points to 4.27%, while the two-year rate increased by one basis point to 4.16%. In corporate developments, Apple is collaborating with Broadcom in the development of its inaugural server chip specifically tailored for artificial intelligence, as featured in a report from the Information, citing unnamed sources.
Broadcom’s shares soared by 6.6%, positioning it as the top gainer on both the S&P 500 and Nasdaq, while Apple’s stock dipped by 0.5%. Alphabet's class A and C shares both jumped by 5.5%, emerging as strong performers on the S&P 500 and Nasdaq. The tech behemoth's subsidiary, Google, announced the launch of its new AI model, Gemini 2.0. In a significant corporate merger development, Albertsons terminated its proposed $25 billion acquisition by Kroger after two courts ruled against the deal.
Albertsons subsequently filed a lawsuit against Kroger for allegedly failing to secure regulatory approvals. As a result, Albertsons shares declined by 1.5%, whereas Kroger saw an uptick of 1%. Macy's, on the other hand, revised its full-year earnings outlook downward as it concluded its investigation into an accounting issue that delayed the release of its fiscal Q3 results, resulting in a 0.8% drop in the company’s stock. Additionally, West Texas Intermediate crude oil prices surged by 2.5%, closing at $70.3 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) revised its global oil demand projections for 2024 and 2025 downward for the fifth consecutive month, citing bearish data received for Q3 as a major contributing factor. Moreover, U.S. commercial crude stockpiles decreased more than expected last week, according to government data. In commodity markets, gold prices rose by 1.2% to reach $2,752.10 per troy ounce, while silver prices remained relatively stable at $32.76 per ounce..