S&P 500, Nasdaq edge higher as Apple counters Fed jitters By Reuters

By Sruthi Shankar and Johann M Cherian

(Reuters) – The and Nasdaq edged higher on Wednesday as gains in tech giants Apple and Microsoft (NASDAQ:) offset worries over the Federal Reserve’s aggressive interest rate hikes slowing the U.S. economy.

Apple Inc (NASDAQ:) rose 0.7% to an all-time high, while Amazon (NASDAQ:), Alphabet (NASDAQ:) and Tesla (NASDAQ:) rose between 1.1% and 3.2%.

“The market is very focused on the only real source of growth which is the technology sector and specifically the AI sector, which has raised the valuation of that vector significantly versus the rest of the market,” said Michael Green, portfolio manager at Simplify Asset Management.

Chipmaker Nvidia (NASDAQ:) was down 0.6%, having recovered from sharp losses earlier in the session after the Wall Street Journal reported the United States could impose new curbs on exports of artificial intelligence chips to China.

Wall Street snapped its losing streak on Tuesday as upbeat economic data eased fears of an imminent U.S. recession, though it bolstered expectations that the Fed could hike rates again in July.

Federal Reserve Chair Jerome Powell reiterated in a European Central Bank forum on Wednesday that most policymakers still see two rate increases this year and did not rule out more rate hike action at the U.S. central bank’s next meeting.

“The Fed is going to continue to fight inflation until they see evidence of either the labor market weakening or more concrete evidence of inflation falling,” said Patrick Kaser, managing director and portfolio manager at Brandywine Global.

“If the Fed is going to make a mistake, they’re going to make it on being too tight rather than easing too soon. So those comments are pretty consistent in that regard.”

Traders now see an 81.8% chance of the Fed hiking interest rates by 25 basis points to a 5.25%-5.50% range in July and expect the central bank to hold rates through the end of 2023, according to CMEGroup’s Fedwatch tool.

At 11:44 a.m. ET, the was down 66.44 points, or 0.20%, at 33,860.30, the S&P 500 was up 3.94 points, or 0.09%, at 4,382.35, and the was up 66.54 points, or 0.49%, at 13,622.21.

Investors are awaiting the Personal Consumption Expenditures (PCE) index reading, the Fed’s favored inflation gauge, initial jobless claims data and the final reading of first-quarter GDP later this week to assess the state of the U.S. economy.

Bank stocks slipped ahead of the Fed’s annual stress test results, which will help determine how much capital banks need to be healthy and how much they can return to shareholders via stock buybacks and dividends.

The S&P banks index slipped 0.5% ahead of the results due after markets close on Wednesday.

Netflix Inc (NASDAQ:) climbed 4.3% as Oppenheimer raised the video-streaming company’s price target to $500 from $450.

General Mills (NYSE:) slid 4.7% after the packaged food maker forecast full-year profit below analysts’ estimates.

Advancing issues outnumbered decliners by a 1.01-to-1 ratio on the NYSE and a 1.07-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and six new lows, while the Nasdaq recorded 50 new highs and 79 new lows.