The broader market had a disappointing performance on Wednesday. However, the tech-heavy Nasdaq closed at an all-time high for the second consecutive session. This was due to resurgent crop stocks that led the market during the pandemic but sank earlier in the year because of inflation worries.
The Dow Jones Industrial Average dropped 0.2% to 33.879 points, which is 2.5% less than its May 4th high. The S&P 500 meanwhile fell 0.1% to 4,241 – ending the day less than 15 points shy of its record close on June 14.
The market rallied last year due to technology stocks. However, this spring, the threat of rising rates and accelerating economic growth prompted a stock-market shift away from tech stocks and towards cyclical and value-leaning segments of the market that suffered during the pandemic (like financials and energy). The Federal Reserve has made clear that they aren’t planning to raise interest rates anytime soon. This is a huge boon for tech stocks which are especially sensitive to rising rates. The S&P has risen 15% this year but has been relatively flat in the last month. The Nasdaq has increased nearly 5% over the same period but is only up 12.5% this year.
“Comments from Fed’s head honcho seem to be calming market,” Oanda analyst Sophie Griffiths wrote Wednesday in an email. She referred to Fed Chair Jerome Powell Tuesday’s insistence that the Fed would not move quickly to increase interest rates. “Moreover, sentiment has been lifted by the downplaying the possibility of an early move-in tightening monetary policy. The clear winner is the tech-heavy Nasdaq.
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