The S&P 500 and Nasdaq closed at record highs after Fed Chairman Jerome Powell warned of the dangers of keeping interest rates high for too long.
The S&P 500 closed up 0.07% at 5,576.98 points, its 36th consecutive record high this year. The Nasdaq closed at 18,429.29, up 0.14%. Both indexes also hit record highs during the session. However, the Dow Jones Industrial Average closed down 52.82 points, or 0.13%, at 39,291.97.
Financial stocks led gains today, with the S&P 500 gaining for a sixth straight session — its longest winning streak since January.
Powell’s testimony
Powell said keeping interest rates high for too long poses a risk to further growth, suggesting the central bank is considering a less restrictive stance.
“Easing policy too slowly or too little could weaken economic activity and the labor market,” Powell said in Senate testimony. “Further positive data could, however, reinforce our confidence that inflation is moving steadily toward the 2% target.”
“The labor market is slowing and Powell is starting to pay attention to that. He acknowledges that policy is tight and that progress has been made on inflation. That sets the stage for Powell action in the coming months,” said David Russell, a strategist at TradeStation.
Powell was particularly careful not to provide a timetable for a rate cut. But it highlighted growing signs of a slowing labor market after the latest data showed unemployment rose for a third straight month in June. “The rhetoric today seems to be priming the market for a rate cut soon,” said Michael Ferroli of JPMorgan Chase & Co.
Nvidia shares rose 2.5% after KeyBanc raised its price target on the major chipmaker’s stock to $180, representing a 40% gain from Monday’s close.
But despite the new all-time highs, gains for the S&P 500 were muted, with shares of Microsoft and McDonald’s down about 1% and 1.4%, respectively.