Dow, S&P 500, Nasdaq notch record close as cooling inflation boosts rate-cut hopes By Investing.com

Investing.com – The Dow Jones, S&P 500 and Nasdaq closed at record levels on Wednesday, as consumer inflation fell more than expected after three months of bullish surprises, raising hopes for faster interest rates and sending Treasury yields sharply lower.

At 16:00 EDT (20:00 GMT), it was up 349 points, or 0.9%, up 1.2%, and up 1.4%. However, all three major averages are on pace toward a record close.

A cooling CPI helps boost hopes for lower interest rates, leading to lower Treasury yields

The overall rate slowed to 0.3% in April from 0.4% the previous month, slower than the 0.4% pace economists had expected, raising hopes that the declining inflation trend is back on track. This brought the annual figure to 3.4%, down from 3.5%.

The index, which excludes volatile food and energy prices, rose 0.3% from March levels, while the core annual CPI inflation rate fell to 3.6% from 3.8% in March.

The slowdown in consumer prices came a day after producer price inflation was higher than expected.

But in the wake of the hot producer price report, “the higher-than-expected CPI report immediately eased fears of a rapid rise in inflation, fueling investors' hopes for rate cuts in the coming months,” Stifel said in a note on Wednesday.

Traders see a 50.5% chance that the US central bank will start cutting interest rates in September, according to the CME FedWatch tool.

Treasury yields fell sharply on the news, with the 10-year Treasury note falling 10 basis points to 4.34%.

Elsewhere on the economic front, retail sales remained unchanged in April, missing expectations for a 0.4% increase, as consumers continued to struggle.

The rise in technology gains strength as returns decline

Shares of major technology and chip companies, including Apple (NASDAQ:), Google (NASDAQ:), META (NASDAQ:), and Nvidia (NASDAQ:) led the broader market rally, with the latter boosted by signs that demand for their existing chips Didn't get better. Affected prior to the release of the next generation Blackwell GPUs.

“Although the next generation of Blackwell GPUs is expected in the second half of the year, we see limited signs of demand pausing,” KeyBanc Capital Market said in a note. The bullish comments come just a week before the chipmaker’s quarterly results are scheduled Released on May 22nd.

Boeing falls over legal concerns

Boeing Company (NYSE:) stock fell 2% after the Justice Department said the plane manufacturer violated a settlement that prevented it from facing criminal prosecution related to two 737 MAX crashes.

But Boeing denied allegations that it violated the settlement and said it respected the terms of the agreement.

Stock rally is fading meme

So-called meme stocks saw more volatile trading on Wednesday, with AMC Entertainment (NYSE:) stock falling 20% ​​after the cinema chain announced a debt-for-equity swap, which will see more than 23 million shares issued.

GameStop (NYSE:) stock is down 18%, with the video retailer giving up some impressive gains this week.

Before Wednesday, shares of GameStop and AMC were up 179% and 135% this week, respectively.

(Peter Nourse and Ambar Warrick contributed to this article.)