The stock market saw the S&P 500 and Nasdaq reaching new highs in a half-day session before the 4th of July holiday, with Tesla and Nvidia leading the surge. The S&P 500 rose by 0.51% to close at 5,537.02, while the Nasdaq Composite rose by 0.88% to end at 18,188.30, both reaching record highs. The Dow Jones Industrial Average, however, lost 0.06%. The weak economic data released on Wednesday, including softening in the economy and a decline in bond yields, raised hopes for a September rate cut. The reports showed less private payroll growth than expected in June, higher than forecasted weekly jobless claims numbers, and a reading of service sector activity indicating a contraction. Tesla's stock jumped 6.5% after a better-than-expected deliveries report, contributing to the market's boost. The data also led to a decline in Treasury yields, with the 10-year U.S. Treasury rate falling for a second day in a row. The weak economic reports fueled investor optimism for a September rate cut, with traders now pricing in 74% odds of a rate cut. The hope is that the economy will soften just enough to keep inflation in check without triggering a recession. The Labor Department reported that initial jobless claims rose by 4,000 to 238,000, and separate data from ADP showed private payrolls added 150,000 new jobs in June, below economists' expectations. The Institute for Supply Management's Services Purchasing Managers Index (PMI) unexpectedly slipped into contraction territory in June. The stock market's rally continued on Wednesday, with the S&P 500 setting an all-time high for the 33rd time this year, and the Nasdaq Composite closing at a record for the 23rd time. The market closed early for the 4th of July holiday, with Tesla's stock continuing to rally after a strong second-quarter delivery report. The weak economic data led to a retreat in Treasury yields, a decline in the dollar, and advances in oil, gold, and silver prices. Fed Chair Jerome Powell's comments at a conference in Portugal indicated progress on inflation but did not provide insight into the Fed's plans for interest rates.
