The Nasdaq surged on Wednesday, closing above 20,000 for the first time. The tech-heavy index climbed 1.77% to end at 20,034.89, posting an all-time high and a new closing record. This boost came after November’s inflation report met economists’ projections, setting the stage for the Federal Reserve to potentially cut interest rates at its upcoming December meeting.
The broader market also saw gains, with the S&P 500 rising 0.82% to close at 6,084.19. However, the Dow Jones Industrial Average was the outlier, falling 99.27 points, or 0.22%, to 44,148.56. Tech stocks played a pivotal role in lifting the market, with the Invesco QQQ Trust, which tracks the Nasdaq-100 Index, rising over 1%.
This fund has seen more than a 24% gain year-to-date. Google, part of Alphabet Inc., notably advanced 5.5% thanks to its new chip release, driving broader sector gains. Other tech giants, including Tesla and Nvidia, also experienced significant increases of nearly 6% and more than 3%, respectively.
Year-to-date, Tesla has risen about 71%, while Nvidia boasts a remarkable 181% increase. November’s consumer price index (CPI), which tracks a basket of goods and services, showed a 0.3% rise from October and a 2.7% increase from a year ago. Excluding volatile food and energy prices, the core CPI increased 0.3% month-over-month and 3.3% annually.
Despite the quicker pace of inflation from the prior month, traders believe the data is still not high enough to prevent the Fed from cutting rates at its next meeting.
Nasdaq hits milestone amid tech surge
Fed funds futures suggest a 95% likelihood of an interest rate cut next week, according to CME Group data.
Tom Hainlin, senior investment strategist at U.S. Bank Asset Management, noted, “We expect a rate cut in the final meeting here at the end of the year. With no surprises, the market’s direction has been higher, and there’s been nothing to derail it from melting up into year-end.”
BTIG forecasts a positive start for the restaurant industry in 2025, naming Starbucks and Wingstop as top picks. Analyst Peter Saleh projects modestly positive industry sales and a highly promotional environment intended to recapture customer traffic early next year.
Labor availability and mid-single digit inflation will push restaurants towards more technology implementations for efficiency. Saleh highlighted Starbucks and Wingstop for their potential gains, driven by strategic management and technological advancements. Meanwhile, analysts remain bullish on General Motors despite the company’s decision to halt funding for its Cruise division’s robotaxi development.
Bank of America and Goldman Sachs maintained their buy ratings, emphasizing the potential of autonomous vehicle technology for personal vehicles. General Motors expects the restructuring to save at least $1 billion annually. Shares of General Motors dipped about 1.5% following the announcement.
Nineteen stocks in the S&P 500 hit new 52-week highs during Wednesday’s session, with twelve reaching new all-time highs, underscoring the market’s robust upward trajectory. As the year draws to a close, positive market sentiment remains high, bolstered by favorable economic data and strong performance in the tech sector. Investors are keenly watching the upcoming Federal Reserve meeting for further indications on the direction of interest rates and the broader economic outlook.
