The S&P 500 and Nasdaq Composite set closing highs on Wednesday as the stock market roared higher ahead of a key inflation reading.
The Dow Jones Industrial Average rallied in the final hour of trading to close up 429 points, or 1.1%. The S&P 500 was up 1%. The Nasdaq Composite was up 1.2%. The S&P closed above 5600 for the first time on record.
The yield on the 10-year Treasury note dipped to 4.28% after Federal Reserve Chair Jerome Powell concluded his second day of Congressional testimony.
Powell reiterated that progress on inflation and a cooling labor market mean the risks to the economy are more balanced than in the past year, when inflation overshadowed worries about employment.
Whether the Fed opts to cut interest rates in September depends entirely on the data releases ahead, starting with Thursday’s consumer price index for June.
“We always expect CPI to be surprising, usually in a negative way, so the rally is vulnerable,” writes Andrew Brenner, head of international fixed income at NatAlliance Securities. “But one number does not make a trend, we have heard that from the Fed all year.”
With the stock market sitting at record levels, it will take an encouraging CPI to push the indexes higher through the end of the week.