Off The Wire
S&P, Nasdaq hit fresh 2023 highs as Tesla rallies
June 9 (Reuters) - The S&P 500 and Nasdaq hit fresh 2023 highs on Friday as Tesla shares jumped following a tie-up with General Motors, while investors awaited inflation data and U.S. monetary policy decision due next week.
The benchmark S&P 500 on Thursday ended 20% above its Oct. 12 closing low, heralding the start of a new bull market as defined by some market participants.
A rally in megacap stocks, a better-than-expected earnings season and expectations that the Fed was nearing the end of its rate-hiking cycle have supported Wall Street this year despite concerns about a looming recession and sticky inflation.
"The overall tone of the market is based on the idea that the Fed will pause its increases," said Rick Meckler, partner at Cherry Lane Investments.
"As it pauses, the broader market will start to rally and maybe catch up with the large-cap tech stocks that have led the way up until now."
Traders see a 72% chance that the U.S. central bank will hold interest rates at the current 5%-5.25% range in its June 13-14 policy meeting, according to CMEGroup's Fedwatch tool.
Consumer prices data on Tuesday will help shape expectations around further moves by the Fed, with traders already pricing in a 50% chance of another 25-basis-point rate hike in July.
"We expect the Fed to hike one last time in this cycle in July. By September, we think weakening activity and employment data will lead toward a more enduring pause, with the Fed holding at 5.5% until its first rate cut in March 2024," economists at BNP Paribas noted.
Signs of a resilient U.S. economy and hopes of the Fed pausing its aggressive monetary tightening have pushed volatility gauges tumbling. The CBOE Volatility index (.VIX), commonly known as Wall Street's fear gauge, sank to a fresh pre-pandemic level of 13.53 points on Thursday.
At 10:00 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 56.85 points, or 0.17%, at 33,890.46, the S&P 500 (.SPX) was up 19.56 points, or 0.46%, at 4,313.49, and the Nasdaq Composite (.IXIC) was up 122.32 points, or 0.92%, at 13,360.85.
Target Corp (TGT.N) slipped 1.3% after Citi downgraded the big-box retailer to "neutral", saying sales could fall further this year amid a challenging macro backdrop.
Adobe Inc (ADBE.O) added 5.4% after Wells Fargo upgraded it to "overweight", saying the Photoshop software maker was poised to benefit from the generative AI boom.
Netflix Inc (NFLX.O) gained 1.7% following a report that its subscriptions jumped after the streaming giant's crackdown on password sharing.
Declining issues outnumbered advancers by a 1.36-to-1 ratio on the NYSE, while advancing issues outnumbered decliners by a 1.00-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and five new lows, while the Nasdaq recorded 45 new highs and 22 new lows.