Key points:

  • The S&P 500 and Nasdaq Composite indices reached new record highs amid gains in technology stocks and the release of positive economic data.
  • Taiwan Semiconductor Manufacturing Co. Quarterly Report exceeded analysts’ expectations.
  • Apple reached a record capitalization of $3 trillion.

The Nasdaq and S&P 500 indices reached new record values ​​at the close of trading. This was driven by rising stock prices of tech giants – most notably Nvidia – as well as the release of important economic data and quarterly earnings reports.

The S&P 500 index increased by 1.02%, ending the session at 5,633.91 points. The Nasdaq Composite added 1.18% to 18,647.45. The Dow Jones Industrial Average also showed positive dynamics, rising 1.09% to 39,721.36 points.

Contribution of heavyweights to the growth of indices

The Philadelphia Semiconductor Index posted an impressive 2.4% gain, hitting a new record high. The reason for such dynamic growth was the announcement of Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip manufacturer, about quarterly profits that exceeded analysts’ expectations.

“TSMC data confirmed the relevance of the trend towards the development of artificial intelligence,” said Thomas Martin, senior portfolio manager at Globalt Investments. “Today, the TSMC report has become one of the most important sources of information for investors.”

Against the backdrop of optimistic forecasts, shares of leading semiconductor manufacturers showed significant growth. Micron Technology shares soared 4%, Nvidia added 2.7% and Advanced Micro Devices rose 3.9%.

It is worth noting that all 11 S&P 500 industry indices showed positive dynamics on Wednesday. The leader in growth was the information technology sector, which added 1.63%. It was followed by the materials sector, which grew by 1.34%.

Despite the positive market dynamics, trading volume on US exchanges was relatively small. There were 10 billion shares traded, below the average of 11.5 billion shares over the past 20 trading sessions.

Particular attention should be paid to Apple shares, which rose 1.9%, reaching a new record level. Apple’s market capitalization exceeded $3 trillion for the first time in history.

Traders are monitoring inflation and the start of the second earnings season

On the second day of his testimony in Congress, Fed Chairman Powell said he wasn’t yet ready to say that inflation was steadily falling to 2%, although he expressed “some confidence” in this. With only a few large-cap stocks leading Wall Street’s gains this year, some investors are wary of a possible sell-off if earnings at those companies fall short of lofty expectations. Traders are focusing on inflation data in the US, namely the consumer price index on Thursday and the producer price index on Friday.

Expectations for a 25 basis point rate cut by September rose to 74% from about 70% on Tuesday and 45% a month earlier, according to FedWatch CME data.

The second-quarter earnings season, which begins this week with the major banks reporting on Friday, will be a test of whether large-cap companies can justify their expensive valuations and extend their strong growth.