Wall Street hits record highs as rate-cut hopes flourish, chipmakers rally

Wall Street’s main stock indexes climbed to record highs on Thursday as chip stocks rallied following Micron Technology’s upbeat forecast, while investors took comfort in the Federal Reserve sticking to its three-rate-cut view for this year.

The Dow Jones Industrial Averageclimbed 330 points, or 0.8%, to 39,842, while the S&P 500and the Nasdaqadvanced 0.6%.

The three major indexes were trading at record highs, while all 11 major S&P 500 sectors also rose, with consumer discretionary leading gains, up 0.7%.

Chipmaker Micron Technology jumped 14% to a record high after posting a surprise quarterly profit and forecasting third-quarter revenue above estimates.

Peers such as Intel and Nvidia added more than 1% each, while the Philadelphia Semiconductor index advanced 2.9%.

Stock indexes had closed higher on Wednesday after central bankers kept borrowing costs unchanged and indicated they still expect to ease interest rates by three-quarters of a percentage point by the end of 2024.

“The tone was very much expected, it was basically saying that yes, we’re getting closer to the point where we can cut rates, but we still need more data,” said Mohit Kumar, chief European economist at Jefferies.

Inflation reports “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%,” Fed Chair Jerome Powell said in a press conference after the policy meeting.

The CME FedWatch tool showed the market is now pricing in a 70% chance of a Fed rate cut in June, compared with around 56% estimated at the beginning of the week.

UBS Global Research said that it now expects the first cut in June, compared with its prior forecast of a cut in May.

Meanwhile, the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth remained strong in March.

A separate reading showed flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, came in at 52.2 this month versus 52.5 in February.

Most rate-sensitive megacap growth and technology stocks also advanced.

Apple, however, eased 1.2% after the Justice Department sued the company for allegedly violating antitrust laws.

IT services provider Accenture fell 7.6% after it cut its fiscal-year 2024 revenue forecast, as an uncertain economy prompts clients to cut spending on its consulting services.

Broadcom gained 4.9% as TD Cowen upgraded its rating to “outperform.”

Reddit’s shares are expected to start trading on the New York Stock Exchange later in the day under the ticker ‘RDDT’ after the social media platform priced its initial public offering at the top end of its targeted range of $31 to $34 per share.