Wall Street closed higher on Wednesday, driven by tech and utility stocks. Fed minutes from the June meeting raised hope that there will be further rate cuts in 2025. All three benchmark indexes closed in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.5%, or 217.54 points, to close at 44,458.30. Sixteen components of the 30-stock index ended in positive territory, while 14 ended in negative.
The tech-heavy Nasdaq Composite gained 192.87 points, or 1%, to close at 20,611.34.
The S&P 500 added 37.74 points, or 0.6%, to close at 6,263.26. Eight of the 11 broad sectors of the benchmark index closed in the green. The Utilities Select Sector SPDR (XLU), the Industrials Select Sector SPDR (XLI) and the Technology Select Sector SPDR (XLK) advanced 0.9%, 0.7% and 0.6%, respectively, while the Consumer Staples Select Sector SPDR (XLP) lost 0.7%.
The fear-gauge CBOE Volatility Index (VIX) decreased 5.2% to 15.94. A total of 18.1 billion shares were traded on Wednesday, lower than the last 20-session average of 18.4 billion. Advancers outnumbered decliners by a 2.17-to-1 ratio on the NYSE and by a 1.93-to-1 ratio on the Nasdaq.
Fed Minutes Signal Rate Cuts Later in the Year
On Wednesday, the release of the minutes from the Fed’s June meeting showed that only a couple of policymakers backed an immediate rate cut in July, while the majority leaned toward holding steady and reassessing later in the year. Most officials flagged inflationary risks from President Trump’s tariff policies and noted that the current interest rate level of 4.25-4.50% might already be close to neutral.
This cautious tone triggered swift market reactions. Rate-cut odds for July collapsed, while expectations shifted to September. Investors responded by boosting risk assets in a classic "risk-on" move. Markets factored in slower Fed tightening, and the dollar weakened accordingly. Notably, gold rebounded and oil held steady amid the shift.
The cautious language surrounding tariff risk and the absence of aggressive dovish signals led markets to push back bets on rate-cuts to later in the year, fueling equity gains and lower yields as traders embraced a less hawkish Fed trajectory.
The Fed minutes also revealed growing concerns among policymakers about geopolitical tensions and global economic uncertainty, which could weigh on future growth. While inflation was noted to be easing gradually, it remained above the Fed’s 2% target, prompting most members to advocate for patience before easing policy. This tempered rate-cut outlook helped lift cyclical and tech stocks, with investors betting that any future cuts would be gradual and supportive of growth. The 10-year Treasury yield slipped below 4.20%, signaling increased confidence that monetary policy would not tighten further in the near term. Markets now await key inflation data due next week.
Consequently, shares of Vistra Corp. VST and Broadcom Inc. AVGO added 3.6% and 2.2%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Nvidia Briefly Breaches $4 Trillion Valuation Mark
The semiconductor giant NVIDIA Corporation NVDA briefly reached an unprecedented $4 trillion market valuation on Wednesday, making it the first public company to hit that milestone. That surge lifted investor sentiment across the board, helping propel the Nasdaq to a record high and pushing the S&P 500 and Dow Jones significantly higher.
Economic Data
Per the U.S. Census Bureau, Wholesale Inventories for May came in 0.3% lower. The number for April was revised down to a 0.1% increase from the previously reported 0.2%.
Per a government report, for the week ending July 4, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.1 million bpd from the previous week. The number for the week prior remained unrevised at an increase of 3.8 million bpd.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report Vistra Corp. (VST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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