Key points:

  • All three major US stock market indices are on track for quarterly growth.
  • The Dow Jones is less than 1% away from 40,000.
  • Nasdaq gains were tempered by a 2.5% decline in Nvidia shares.

The American stock market showed strong growth on Wednesday. The Dow Jones index, leading the growth rate, set a new record closing level. The S&P 500 index also hit an all-time high, largely driven by gains in pharmaceutical company Merck. Investors are eagerly awaiting the release of inflation data and comments from the Federal Reserve, which could provide signals on the future trajectory of interest rates.

The Dow Jones Industrial Average rose 477.75 points, or 1.22%, to 39,760.08. The S&P 500 added 44.91 points, or 0.86%, to 5,248.49. The Nasdaq Composite rose 83.82 points, or 0.51%, to 16,399.52.

It is worth noting that this growth was the most significant for the Dow Jones since December 13. All three major US stock indexes are on track for quarterly gains. The S&P 500, in particular, posted its highest first-quarter percentage gain since 2019.

Nvidia shares decline

The Dow Jones index, made up of the 30 largest US stocks, is less than 1% away from breaking the all-time mark of 40,000.

Gains in the tech-heavy Nasdaq were more subdued, partly due to a 2.5% decline in artificial intelligence giant Nvidia. However, Nvidia shares are still up more than 80% year over year.

All 11 major sectors of the S&P 500 posted positive gains. The leaders in growth were the utilities and real estate sectors, which added 2.75% and 2.42%, respectively.

Among individual stocks, Trump Media & Technology Group soared 14.19% in the day after its debut on the Nasdaq. Meanwhile, GameStop shares fell 15.03% after the video game retailer reported lower fourth-quarter revenue and job cuts.

Trading volume on US exchanges was below average due to the upcoming holidays.

Investors remain optimistic

Despite recent data showing a higher-than-expected rise in inflation, according to PPI and CPI data, the market remains confident that the Federal Reserve (Fed) will cut rates by at least 25 basis points in June.

At its policy meeting last week, the Fed reiterated its forecast of three rate cuts over the course of the year, a position that was supported by comments from Fed members this week.

The Personal Consumption Price Index (PCE), which is the Fed’s preferred measure of inflation, will be released on Good Friday, when the US stock market is closed.

According to financial experts, the Fed can and should act cautiously given the strength of the economy, since premature rate cuts could lead to negative consequences.