The S&P 500 Futures Are Virtually Flat After Hitting Its 17th Record High of the Year

On Wednesday, U.S. stock markets displayed a mixed performance, reflecting investors' resilience to a moderately higher-than-anticipated February inflation report. The previous session's gains had propelled the S&P 500 to achieve its 17th record high of the year.

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Examining how the major stock indexes were faring:

• The Dow Jones Industrial Average (DJIA) rose by 147 points or 0.4%, reaching 39,152.
• The S&P 500 (SPX) experienced a decline of 8 points or 0.2%, settling at 5,167.
• The Nasdaq Composite (COMP) saw a drop of 97 points or 0.6%, closing at 16,169.

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In the prior trading day, the Dow industrials recorded a 0.6% increase, the S&P 500 added 1.1%, closing at 5,175.27, and the Nasdaq climbed by 1.5%. These gains marked the most substantial one-day point and percentage increases for the three major indexes since February 22, according to data from Dow Jones Market Data.

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Market forces on Wednesday were grappling with the S&P 500's attempt to extend its rally into uncharted territory, all while investors digested a consumer price index (CPI) report for February that surpassed earlier predictions. Simultaneously, the market remained steadfast in anticipating a Federal Reserve interest-rate cut of at least 25 basis points in June.

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Guy LeBas, Chief Fixed-Income Strategist at Janney Montgomery Scott, expressed confidence in the directional trend of inflation, asserting that it is gradually aligning with the Federal Reserve's 2% target. However, he remained uncertain about the specific timeline for achieving this alignment. LeBas suggested that the recent two months of inflation data had not significantly altered the opinions of Federal Open Market Committee (FOMC) officials regarding monetary policy.

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Referring to Federal Reserve Chair Jerome Powell's testimony last week, which indicated the possibility of rate cuts continuing into 2024, LeBas emphasized the consistent messaging from various Fed officials over the past month. The December Summary of Economic Projections by the FOMC estimated a median of three cuts totaling 75 basis points by the end of 2024. Updated interest-rate projections from the Fed are slated for release the following Wednesday.

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Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, commented on the prevailing glass-half-full mentality, attributing it to the underlying strength of the U.S. economy. She noted that, despite a slight uptick in U.S. inflation, the prevailing sentiment is one of celebration rather than caution.

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With no significant U.S. economic reports scheduled for Wednesday and the central bank observing a quiet period before its upcoming policy decision, no Fed speakers were slated to address the market. In the backdrop, the market sentiment remained buoyed by secular growth factors in mega-cap tech stocks, along with hopes that a severe economic downturn had been averted.

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Tuesday's market surge was primarily led by the "Magnificent Seven" tech stocks, and notable companies such as Nvidia, Dollar Tree, Petco Health & Wellness, and Williams-Sonoma reported results before the opening bell. Additional reports from UiPath, SentinelOne, and Lennar were expected after the market closed.

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