S&P 500 and Nasdaq hit record highs on tech gains and inflation optimism

Stocks rose Thursday, pushing the S&P 500 and Nasdaq Composite back to record highs, as hope over easing inflation and gains in tech aided Wall Street’s midweek bounce.

The broad S&P 500 advanced 1.03% to 5,157.36, while the tech-heavy Nasdaq Composite climbed 1.51% to 16,273.38. Both notched all-time highs during the session, while the S&P 500 also clinched a closing record. The Dow Jones Industrial Average gained 130.30 points, or 0.34%, to close at 38,791.35.

Investor optimism was boosted after the European Central Bank lowered forecasts for annual inflation and growth on Thursday, though the bank also held key interest rates steady. That can be taken as a positive signal on the international inflation front.

The ECB’s announcement comes after Federal Reserve Chair Jerome Powell told Congress on Wednesday that he expects interest rates to come down this year. While Powell said that the Fed was not immediately ready to begin cutting, he told the Senate Banking Committee on Thursday that the central bank isn’t far from having the confidence it needs on inflation to start.

The Nasdaq was helped by a gain of about 4.5% in Nvidia, the artificial intelligence darling whose shares have climbed more than 12% this week. But Apple ended the day slightly lower for its seventh straight losing session.

Costco, Meta and Nvidia were among several stocks reaching new 52-week highs, alongside numerous S&P 500 companies, reflecting a broad market rally. Notable advancements were seen in AI-related companies like Nvidia, Micron, and NXP Semiconductors, as well as insurance giants Progressive and Prudential, signalling robust performance in various sectors.

Investors are awaiting Friday’s U.S. jobs report for insights into the state of the labour market, which has shown resilience despite higher interest rates.

In commodity-related news, China's biggest copper smelters are expected to meet in Beijing during next week in order to review measures to counter the recent plunge in ore processing fees. The meeting will be hosted by the China Nonferrous Metals Industry Association. Senior executives from at least fifteen smelters are expected to discuss a joint production cut, however it may be difficult for all the plants to agree on such a plan.

Turning to US sectors, all sectors closed higher except for Real Estate and Financials. Tech was the best performer.

In the Australian landscape, hedge funds covering nearly $1 billion in short positions in February shifted their focus to larger ASX companies such as Commonwealth Bank, Rio Tinto, and BHP Group, resulting in increased shorting activity and heightened market volatility during earnings season.

This shift led to a significant decrease in short interest in heavily shorted stocks like IGO and Core Lithium, while some stocks, including Pilbara Minerals, continued to attract substantial short interest despite the overall rotation in positioning.

Futures

The SPI futures are pointing to a 0.58 per cent rise.

Currency

One Australian dollar at 9.00am was buying 66.18 US cents.

Figures around the globe

European markets closed higher. London’s FTSE added 0.17 per cent, Frankfurt gained 0.71 per cent, and Paris closed 0.77 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei fell 1.23 per cent, Hong Kong’s Hang Seng lost 1.27 per cent and China’s Shanghai Composite lost 0.41 per cent..

Yesterday, the Australian share market closed 0.39 per cent higher at 7,763.71.

Ex-dividends
Copper Strike Ltd (ASX:CSE) is paying 0.6 cents fully franked
Finexia Financial Group (ASX:FNX) is paying 0.5 cents fully franked
Insignia Financial (ASX:IFL) is paying 9.3 cents unfranked
Meridian Energy (ASX:MEZ) is paying 5.6172 cents unfranked
Nine Entertainment (ASX:NEC) is paying 4 cents fully franked
Summerset Grp Hldgs (ASX:SNZ) is paying 10.5879 cents unfranked
US Masters Res Fund (ASX:URF) is paying 1 cent unfranked
Wisetech Global Ltd (ASX:WTC) is paying 7.7 cents fully franked

Dividends payable
GUD Holdings Ltd (ASX:GUD)
JB Hi Fi Ltd (ASX:JBH)
Whitehaven Coal Ltd (ASX:WHC)
Microequities Asset Management Group Ltd (ASX:MAM)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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