Nasdaq pops as investors shun Fed, Tesla rallies ahead of Elon Musk pay decision

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U.S. stocks traded mixed on Thursday, with the S&P 500 holding close to its record high as investors weighed the dual pull of cooling inflation and a Federal Reserve retreat on interest rate cuts.

The S&P 500 (^GSPC) fell below the flat line as the benchmark hit 5,400 to close at a new all-time high. The Nasdaq Composite (^IXIC) rose 0.2% after breaking a record of its own, as tech stocks led the charge higher. But the Dow Jones Industrial Average (^DJI) edged lower, falling 0.7%.

Stocks hit records on a dramatic day that brought a double dose of market-moving events: Lower-than-expected consumer inflation and the Fed’s rate outlook.

But policymakers’ shift from three rate cuts this year to just one did not seem to worry investors, given Chairman Jerome Powell’s reminder that the projection is not set. Traders are still pricing in two rate cuts starting in September, according to the CME FedWatch tool.

Read more: How does the labor market affect inflation?

The producer price index for May fell in what appears to be the latest sign that inflation is easing. The reading fell 0.2% month-on-month after rising 0.5% in April.

Also looming large is Tesla’s ( TSLA ) shareholder vote on whether to approve a $56 billion pay package for its CEO Elon Musk, a move some big investors opposed. Overnight Musk said compensation and the EV maker’s move to Texas have passed “by wide margins.” Tesla shares rose about 4% on Thursday.

Meanwhile, a surge in shares of Broadcom ( AVGO ) lifted spirits in a market looking to AI and technologies to fuel a rally. The chipmaker, a key supplier to Apple ( AAPL ), is on track for its biggest profit since 2020 after upbeat results boosted by AI demand.

LIVE3 updates

  • Tax cuts vs. ‘direct investment’: Trump and Biden square off with business leaders

    Yahoo Finance’s Ben Werschkul reports:

    Both the Trump campaign and the Biden administration are offering an outreach to the business world Thursday with dueling events that crystallize their various promises to corporate America if they win the election.

    Both offer carrots in some way, just with a different taste.

    Donald Trump, who will meet Thursday morning with a group of prominent CEOs in Washington DC, is extremely focused on cutting taxes as well as cutting government regulations.

    The promise from Biden’s team is that a second term will focus, as Treasury Secretary Janet Yellen will say in a speech Thursday to New York business leaders, on “public interventions to create a supportive environment for business and to encourage private sector investment.

    It remains to be seen which approach resonates with both the general business community and the general public.

    But many CEOs have signaled a narrow focus on taxes in the coming year ahead of the expiration of key provisions in Trump’s 2017 tax cuts that come at the end of 2025.

    Read more here.

  • Nvidia and Broadcom touch new highs

    Shares of Nvidia ( NVDA ) gained as much as 3% on Thursday to hit new all-time intraday highs after chipmaker Broadcom ( AVGO ) posted upbeat quarterly results boosted by AI demand.

    Broadcom also announced a 10-for-1 stock split, sending shares to record highs on Thursday. Apple’s ( AAPL ) major supplier is on track for its biggest gain since 2020.

  • S&P 500, Nasdaq inch higher as Tesla rises 5%

    The Nasdaq and S&P 500 held near record highs on Thursday as investors digested the Federal Reserve’s tendency to cut rates just once this year, while technology stocks gained.

    The S&P 500 (^GSPC) rose 0.2% as the benchmark hit 5,400 to close at a new all-time high. The Nasdaq Composite (^IXIC) rose 0.6% after breaking a record of its own, as technology stocks led the charge higher.

    The Dow Jones Industrial Average (^DJI) was down 0.3%

    Shares of Tesla ( TSLA ) opened 5% higher after Elon Musk indicated that two key shareholder votes, one of which involved his $56 billion pay package, had passed “by wide margins.”

    The Federal Reserve hinted at just one rate cut later this year, drawing market expectations for at least two cuts. The Federal Open Market Committee (FOMC) kept rates unchanged on Wednesday after its two-day meeting. The decision came at the end of the latest Consumer Price Index, which signaled cooling inflation for the month of May.

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