On Wednesday, August 13, the US stock market continued to rise, maintaining its recent upward momentum. The market anticipates a rate cut by the Federal Reserve in September, a prospect that has driven major stock indices to new historic highs.
By the closing bell, the Dow Jones Industrial Average rose by 463.66 points, a 1.04% increase, closing at 44,922.27 points, marking over 400 points increase for two consecutive days. The S&P 500 index rose by 0.32% to close at 6,466.58 points, while the Nasdaq Composite index increased by 0.14% to close at 21,713.14 points. Both the S&P and Nasdaq set new record closing highs for two consecutive days.
In the tech sector, AMD surged by 5.4%, leading the technology sector, Apple rose by 1.6%, and Paramount Skydance saw a 36.7% increase in stock price.
This wave of growth follows the record-setting session on Tuesday, where the market was stimulated by a lower-than-expected inflation report, giving investors hope for a Fed rate cut in September. According to data from the Chicago Mercantile Exchange’s FedWatch tool, traders foresee a nearly 100% chance of a rate cut at the Fed’s September meeting.
Ross Mayfield, an investment strategist at the US multinational investment and financial services company Baird, expressed that the robust second-quarter earnings season to date has been another driver for the market. Despite a slight slowdown in earnings releases in recent days, he expects a rebound next week with several major retailers announcing their performance.
He told CNBC, “This has been an impressive earnings season, showcasing the resilience of companies after facing multiple headwinds throughout the summer, with earnings covering a wide range.”
Furthermore, investors have been shifting their focus from the mega-cap tech giants to US small-cap indices, with the Russell 2000 index rising by 2% on Wednesday. Small-caps typically benefit from lower interest rates as it reduces capital costs and may stimulate consumer spending.
The US Producer Price Index (PPI) report is set to be released on Thursday, August 13, providing further insights into the US economic situation.
In a report to clients on Wednesday, Wolfe Research, a US stock research company, pointed out that the overall strength of this earnings season has bolstered the fundamental aspects of the US economy.
Chris Senyek, the company’s Chief Investment Strategist, wrote, “Despite significant volatility in US policies (tariffs and monetary policies) throughout the quarter, we believe overall corporate performance has been very impressive.”
“While we anticipate increased seasonal volatility in the coming weeks, the fundamentals of the stock market remain strong, especially driven by long-term bullish factors such as the artificial intelligence investment boom,” he added.