The Nasdaq Composite marked a significant milestone by closing above the 20,000 mark for the first time, propelled by a rally in major technology shares as markets analyzed recent inflation data. The technology-focused index surged 1.8% to finish at 20,034.9 on Wednesday, while the S&P 500 also saw gains, up 0.8% to reach 6,084.2.
However, the Dow Jones Industrial Average experienced a slight decline, down 0.2% to 44,148.6. The communication services sector led the rally, while health care registered the largest drop. Notably, Alphabet's class A and C shares each rose by 5.5%, making them some of the top performers on both the S&P 500 and the Nasdaq.
This surge coincided with the launch of Google’s latest AI model, Gemini 2.0. Tesla's shares jumped 5.9%, with Amazon.com and Meta Platforms increasing by 2.3% and 2.2%, respectively. Microsoft gained 1.3%. In other corporate developments, Apple is collaborating with Broadcom to create its first server chip designed specifically for artificial intelligence.
Reports indicate that Broadcom's shares soared by 6.6%, positioning it as the leading gainer on both the S&P 500 and the Nasdaq, while Apple’s stock decreased by 0.5%. From an economic perspective, the US consumer price index rose by 0.3% in November, a slight increase from the 0.2% recorded in the previous four months.
Year-over-year inflation accelerated to 2.7%, up from October's 2.6%. These figures were consistent with forecasts compiled in a Bloomberg survey. The inflation report indicates that progress in curbing inflation is becoming more incremental, underscoring the Federal Reserve’s challenge in returning to a target of 2% inflation, as highlighted by TD Economics.
Market expectations now lean toward a nearly certain 25-basis-point interest rate reduction in the upcoming week, according to the CME FedWatch tool. Additionally, the official report on producer prices for November is expected to be released on Thursday. The US 10-year yield increased by 5.2 basis points to 4.27%, while the two-year rate edged up one basis point to 4.16% on Wednesday.
In corporate news, Albertsons terminated its proposed $25 billion acquisition by Kroger following judicial rulings that blocked the deal. Albertsons has since filed a lawsuit against Kroger, alleging failure to secure necessary regulatory approval. As a consequence, Albertsons’ shares decreased by 1.5%, while Kroger saw a slight rise of 1%.
Meanwhile, Macy's adjusted its full-year earnings outlook downward, concluding an investigation into an accounting issue that caused delays in releasing its complete fiscal third-quarter results. Shares of Macy's closed down by 0.8%. On the commodities front, West Texas Intermediate crude oil rose by 2.5%, reaching $70.27 per barrel, while the Organization of the Petroleum Exporting Countries reduced its global oil demand forecasts for 2024 and 2025 for the fifth consecutive month, utilizing bearish third-quarter data as the basis for the revision.
US commercial crude stockpiles fell more than expected last week, according to government reports. Gold prices increased by 1.3% to $2,752.70 per troy ounce, and silver prices saw a modest rise of 0.2% to $32.80 per ounce..