U.S. stocks moved higher in early Wednesday trading, adding to recent momentum as expectations for lower Federal Reserve interest rates continued to drive the major indexes to fresh records.
The S&P 500 rose 0.4%, while the Nasdaq Composite gained 0.5%, with both benchmarks setting new all-time highs.
The Dow Jones Industrial Average climbed 269 points, or 0.6%.
The moves follow Tuesday’s rally, which was fueled by a softer-than-expected inflation report.
The data reinforced investor hopes that the Fed will begin cutting rates in September.
According to the CME FedWatch Tool, traders are now pricing in a 99% probability of a rate cut at the September meeting.
Attention will turn next to Thursday’s producer price index (PPI) report on wholesale inflation, which will offer additional insight into price trends. Investors are also eyeing the Fed’s annual Jackson Hole symposium, set for August 21–23, for potential policy signals.
Mixed views on market strength
While the latest gains reflect optimism about monetary policy easing, not all market participants are convinced the rally has lasting power.
Warren Pies, co-founder of 3Fourteen Research, cautioned that recent buying in small-cap stocks may be seasonal rather than indicative of a broader market surge.
“We’ve had some seasonal buying in the beginning of August, and I think people are starting to jump the gun and misinterpret that as this summer melt-up that everyone wants to believe in,” Pies said on CNBC’s “Closing Bell.”
He pointed to concerns about the labor market and economic growth that he believes the market may be underestimating.
Corporate movers: earnings and analyst calls drive swings
A flurry of corporate earnings and analyst actions led to significant moves in individual stocks at the open.
Cava Group shares tumbled 16% after the Mediterranean restaurant chain posted weaker-than-expected second-quarter revenue growth and lowered its full-year same-store sales forecast.
CoreWeave, an artificial intelligence infrastructure provider, fell about 13% despite beating second-quarter revenue estimates.
The company’s CFO, Nitin Agrawal, noted that growth remains constrained by capacity as demand continues to exceed supply.
Circle slipped 2.1% after announcing plans to offer 10 million Class A shares to the public, including 2 million from the company itself.
Brinker International, parent of Chili’s, jumped 3% after reporting adjusted earnings of $2.49 per share on $1.43 billion in revenue, topping analyst expectations.
Hanesbrands extended it gains to a 5% jump after soaring 28% in the prior session, following news of its $4.4 billion takeover by Gildan Activewear.
V2X rose 7.3% after Bank of America upgraded the stock to buy, citing sustainable growth prospects.
Palo Alto Networks gained 1.7% after Deutsche Bank raised its rating to buy, highlighting the cybersecurity firm’s core business strength.
SailPoint advanced 7% following a JPMorgan upgrade to overweight, with the bank advising investors to “buy the dip.”
KinderCare Learning Companies dropped nearly 20% after reporting weaker-than-expected second-quarter earnings and revenue.
Barclays downgraded the stock to equal weight from overweight following the results.
With key inflation data and the Jackson Hole meeting ahead, markets appear poised for continued volatility in the coming sessions, even as major indexes trade at record levels.
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