Target shares surged over 11% after strong earnings, while Macy's fell on a lowered forecast
The S&P 500 rose on Wednesday after the Federal Reserve's July policy meeting summary reinforced hopes for lower interest rates in the near future, as reported by CNBC.
The index increased by 0.42 percent, closing at 5,620.85, which marks its ninth gain in the last ten sessions. This latest rise brought the S&P 500 within 1 percent of its all-time high, with four of its eleven sectors achieving 52-week highs during the day.
The Nasdaq Composite also advanced, gaining 0.57 percent to finish at 17,918.99, securing its ninth positive day out of the last ten. Meanwhile, the Dow Jones Industrial Average climbed 55.52 points, or 0.14 percent, to close at 40,890.49, marking its sixth winning day in the last seven sessions.
The Russell 2000, a small-cap-focused index, outperformed the other major indexes with a gain of over 1 percent.
These market movements followed the release of the minutes from the Federal Reserve's July meeting, where officials suggested that a rate cut in September was increasingly likely. Most participants agreed that easing monetary policy would be appropriate if upcoming economic data met their expectations.
This sentiment aligned with market expectations, as traders were fully pricing in a rate cut for September, according to the CME Group’s FedWatch Tool. However, there is still debate over the size of the potential rate cut.
The gains on Wednesday came after the S&P 500 and Nasdaq Composite had briefly paused their longest winning streaks since late 2023.
August has been a volatile month for equities, starting with a global sell-off on August 5 triggered by a weak US jobs report and an interest rate hike from the Bank of Japan.
However, strong retail sales and a weaker-than-expected inflation report last week helped the markets recover, alleviating some recession fears. As a result, all three major indexes have risen from their levels at the beginning of August.
Market attention is now focused on Federal Reserve Chair Jerome Powell, who is expected to speak at the Jackson Hole Economic Symposium on Friday. His remarks are anticipated to provide further clues about the Fed’s next move on interest rates in September.
“Everyone’s really kind of looking ahead to see what the Fed is going to do next,” said Chris Zaccarelli, chief investment officer at Independence Advisor Alliance. “I think the market, at least temporarily, has pivoted away from growth scares and is back focused on what’s going to be the Fed rate cutting cycle.”
In addition to the Fed developments, investors were also monitoring earnings reports. Target shares jumped more than 11 percent after the retailer reported fiscal second-quarter earnings that exceeded Wall Street’s expectations.
In contrast, Macy’s shares dropped nearly 13 percent after the company lowered its full-year sales forecast.
