NEW YORK: The S&P 500 ended higher on Tuesday, lifted by Nvidia and Eli Lilly, while US President Donald Trump’s decision to fire a central bank governor deepened concerns about the Federal Reserve’s independence.
Nvidia rose 1.1% ahead of its quarterly report late on Wednesday, which will show how the world’s most valuable company is faring in the crossfire of Washington and Beijing’s ongoing trade war. The chipmaker’s report could also fuel – or dampen – Wall Street’s rally in AI-related stocks.
Trump late on Monday said he was removing Fed Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, adding to concerns about the central bank’s independence from politics.
S&P 500 futures briefly sank before the stock market recovered as investors focused on unchanged expectations that the central bank will begin cutting interest rates in September.
“The financial market community is increasingly concerned about that independence. That is a real concern over the long run. But over the short run, how much does it change the trajectory of interest rate policy in the next six to 12 months? I think the writing has already been on the wall that we get easier monetary policy in the next six to 12 months,” said Bill Merz, head of Capital Market Research at US Bank Wealth Management, Minneapolis.
Despite lingering inflation pressures, traders have been pricing in a 25-basis-point interest rate cut for the Fed’s September policy meeting, encouraged by dovish signals from Fed chair Jerome Powell, data pointing to labour market weakness and a shakeup at the central bank.
Morgan Stanley became the latest brokerage to forecast an interest-rate cut in September, but key upcoming inflation and jobs reports could prompt investors to reassess expectations.
Eli Lilly jumped almost 6% after the drugmaker said its experimental pill cuts body weight by 10.5% in diabetes patients.
The S&P 500 is trading at about 23 times expected earnings, a four-year high, heightening the risk of a selloff if Nvidia’s results dent Wall Street’s enthusiasm for AI-related stocks.
The S&P 500 climbed 0.41% to end the session at 6,465.94 points, just short of its August 14 record-high close.
The Nasdaq gained 0.44% to 21,544.27 points, while the Dow Jones Industrial Average rose 0.30% to 45,418.07 points.
Seven of the 11 S&P 500 sector indexes rose, led by industrials, up 1.03%, followed by a 0.76% gain in financials.
Advanced Micro Devices gained 2% after Truist Securities upgraded the chip stock to “buy” from “hold.” EchoStar surged 70% to a record high after telecom giant AT&T said it has agreed to buy certain wireless spectrum licences from the satellite communications firm for about US$23 billion.
Advancing issues outnumbered falling ones within the S&P 500 by a 1.1-to-one ratio.
The S&P 500 posted 21 new highs and 2 new lows; the Nasdaq recorded 120 new highs and 59 new lows.
Volume on US exchanges was relatively light, with 15.7 billion shares traded, compared with an average of 16.9 billion shares over the previous 20 sessions. — Reuters