WASHINGTON (dpa-AFX) - After initially extending the rally seen during Tuesday's session, stocks gave back ground over the course of the trading day on Wednesday but managed to close mostly higher. Despite pulling back well off their highs of the session, the Nasdaq and the S&P 500 still reached new record closing highs.
The Nasdaq inched up 31.24 points or 0.1 percent to 21,713.14 and the S&P 500 rose 20.82 points or 0.3 percent to 6,466.58, while the narrower Dow posted a more significant gain, jumping 463.66 points or 1.0 percent to 44,922.27.
The stronger gain by the blue chip index came amid notable gains by Dow components UnitedHealth (UNH), Nike (NKE), Sherwin-Williams (SHW) and Merck (MRK).
The early strength on Wall Street came as stocks continued to benefit from optimism about an interest rate cut by the Federal Reserve following yesterday's consumer price inflation data.
With the consumer price inflation data largely coming in line with economist estimates, the Fed is widely expected to lower rates by a least a quarter point next month.
U.S. Treasury Secretary Scott Bessent wants the Fed to keep the door open to a larger, 50 basis point rate cut next month following recent weak jobs data.
CME Group's FedWatch Tool is currently indicating a 93.8 percent chance the Fed will cut rates by 25 basis points in September.
President Donald Trump also continues to pressure Fed Chair Jerome Powell to lower rates and recently threatened to allow a 'major lawsuit' against him over renovations at the Fed's headquarters to proceed.
Buying interest waned over the course of the session, however, with a lack of major U.S. economic data keeping some traders on the sidelines.
Reports on producer price inflation, retail sales, industrial production and consumer sentiment are likely to attract attention in the coming days.
Sector News
Housing stocks turned in some of the market's best performances on the day, with the Philadelphia Housing Sector Index surging by 3.7 percent to its best closing level in eight months.
Substantial strength was also visible among biotechnology stocks, as reflected by the 3.0 percent jump by the NYSE Arca Biotechnology Index. The gain lifted the index to a five-month closing high.
Airline, pharmaceutical and computer hardware stocks also saw considerable strength, while brokerage and software stocks showed notable moves to the downside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.3 percent, while Hong Kong's Hang Seng Index surged by 2.6 percent.
The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index both advanced by 0.7 percent.
In the bond market, treasuries saw notable strength following the modest pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.5 basis points to 4.238 percent.
Looking Ahead
Trading on Thursday may be impacted by reaction to reports on weekly jobless claims and producer price inflation.
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