By David French
(Reuters) -The U.S. central bank and the U.S. central bank both held on to gains to end slightly higher on Tuesday, extending recent winning streaks fueled by renewed expectations that the Federal Reserve will cut interest rates this year.
The progress pushed the S&P 500 to a fourth straight higher close, and its best winning run since March. For the Dow Jones, he is now on the longest positive run since December 2023, winning for the fifth session in a row.
The benchmark performance came despite Walt Disney (NYSE:) fell 9.5%, the biggest percentage decline since November 2022, after a surprise gain in its streaming entertainment division was overshadowed by a decline in its traditional TV business and a weaker box office.
Despite Disney’s setbacks, markets were generally supported by a weaker-than-expected labor market report last week, fueling expectations that the US central bank will cut interest rates.
The index also benefited, but fell lower in afternoon trading on Tuesday and closed slightly lower, taking its own winning run to three.
“I think the market is in this small holding pattern until the big data comes out next week,” said Garrett Melson, portfolio strategist at Natixis Investment Manager Solutions, referring to the Producer Price Index (PPI) due May 14 and the Consumer Price Index. Index (CPI) scheduled for May 15.
Overall, the Fed and policymakers have been consistent in recent weeks in their message that rate cuts will come, but that the central bank will be cautious in implementing them.
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This meant that on a day without major data announcements, markets shrugged off comments from Minneapolis Federal Reserve President Neel Kashkari that the Fed may have to keep rates steady for the rest of the year due to the stalled inflation and the strong housing market.
Overall, Friday’s payroll data and better-than-expected earnings reports helped ease investor jitters around persistent inflation and a robust economy that have kept interest rates high.
Traders expect Fed rate cuts of 46 basis points (bps) by the end of 2024, according to LSEG’s interest rate odds app, with the first rate cut coming in September and another in December. Before last week’s labor report, they expected just one cut.
“The market is much more hypersensitive to the numbers than the Fed is,” Natixis’ Melson said, adding that “the bar for the Fed to abandon the easing bias is extremely high.”
The S&P 500 gained 6.96 points, or 0.13%, to 5,187.70, while the Nasdaq Composite lost 16.69 points, or 0.10%, to 16,332.56. The Dow Jones Industrial Average rose 31.99 points, or 0.08%, to 38,884.26.
Megacap stocks Alphabet (NASDAQ:) and Meta Platforms (NASDAQ:) rose 1.9% and 0.6%, respectively, boosting the major indexes.
Nvidia (NASDAQ:) fell 1.7% after the Wall Street Journal reported that Apple (NASDAQ:) was developing its own chip to run artificial intelligence (AI) software in data centers.
Apple gained 0.4% when it introduced a new chip, the M4, but placed the new chip in an iPad Pro model instead of a laptop.
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Tesla (NASDAQ:) fell 3.8% after data showed the US automaker sold 62,167 Chinese-made electric vehicles in April, down 18% from a year earlier.
Palantir Technologies (NYSE:) fell 15.1%, its sharpest single-day drop since May 2022, after the data analytics company’s annual revenue forecast fell short of analyst estimates.
The S&P 500 posted 49 new highs and two new lows over the past 52 weeks, while the Nasdaq posted 155 new highs and 69 new lows.
