The S&P 500 and Nasdaq Composite popped to record highs Wednesday and added to their strong 2024 performances. The major averages were boosted by a lighter-than-expected U.S. consumer inflation report.

The broad market index gained 1.17%, breaking above 5,300 for the first time, to end at 5,308.15. The tech-heavy Nasdaq Composite rose 1.40%, to close at 16,742.39. The Dow Jones Industrial Average climbed 349.89 points, or 0.88%, ending at 39,908.00.

All three major averages closed at records. Year to date, this is the 23rd record close for the S&P 500, the 18th for the Dow and the eighth for the Nasdaq.

The consumer price index rose 0.3% for the month of April, less than the Dow Jones estimate for a 0.4% monthly increase. The gauge increased 3.4% year over year, in line with expectations. Monthly and yearly numbers for core CPI, which excludes volatile food and energy prices, were both in line as well.

Retail sales remained flat in April. Economists anticipated a 0.4% jump.

Both reports boosted expectations for Federal Reserve rate cuts in the near future. Fed funds futures trading data now suggests a 75.3% likelihood that the U.S. central bank will ease rates at its September meeting, according to the CME FedWatch Tool. This is up from Tuesday's 65.1% chance of a rate cut in the same month.

"Markets really wanted these reports to be soft, and they got what they wanted," said Brian Nick, senior investment strategist at the Macro Institute, who added that these readings solidified the case for the Fed to begin cutting rates this year. "Companies like Nvidia and a lot of these higher growth names are going to benefit from falling interest rates."

Market leaders such as Nvidia popped upon the inflation reading, with shares of the GPU manufacturer rising 3.6%. Tech titans Apple and Microsoft both added more than 1%.

Yields on the benchmark U.S. 10-year and 2-year Treasurys dipped following the economic reports. The rate on the 10-year note fell about 10 basis points to 4.344%. The 2-year Treasury yield was last at 4.726% after sliding roughly 9 basis points.

Stocks have been on a tear this year, as expectations for lower Fed rates and enthusiasm around artificial intelligence — and its potential to boost profits — lifted investor sentiment. The S&P 500 is up more than 11% year to date. That said, the broad market index stumbled last month as worries over sticky inflation pressured equities.

Those concerns were quickly assuaged by new data and comments from Fed officials indicating rate hikes are unlikely going forward.

Major averages notch new record closes

All three major stock averages notched new record closing highs on Wednesday afternoon.

The S&P 500 rose 1.17%, settling at 5,308.15, while the Nasdaq Composite increased 1.40% to close at 16,742.39. The Dow Jones Industrial Average gained 349.89 points, or 0.88%, and finished at 39,908.00.

— Lisa Kailai Han

Higher rates for longer is still the proper monetary policy stance, according to BlackRock's Chaudhuri

While the April inflation print came in below expectations, higher-for-longer interest rates are likely the necessary monetary policy for the Federal Reserve, according to BlackRock chief investment and portfolio strategist, Americas, Gargi Chaudhuri.

"This print reiterates that while inflation is moving in the right direction, a more restrictive policy stance with interest rates remaining on pause is the appropriate monetary policy for this macroeconomic environment," Chaudhuri said Wednesday.

— Brian Evans

Best 'Magnificent 7' stock so far in Q2? It's not Nvidia

The best-performing "Magnificent Seven" stock halfway through the second quarter is Google and YouTube owner Alphabet, up about 14.15%. Apple is higher by some 10.8% so far this quarter, while Nvidia is up 4.8% and Amazon by 2.4%. All four are outpacing the S&P 500, which has risen about 2.1%.

By contrast, Microsoft (+0.6%), Tesla (-0.7%) and Meta Platforms (-1%) are all trailing the S&P 500 in the second quarter.

The best-performing sector this quarter is the S&P 500 Utilities, up 9.9% and more than twice as much as second-ranked S&P 500 Communication Services, higher by 3.9%. S&P 500 Information Technology (+2.8%) is also outperforming the S&P 500.

All the other eight S&P 500 sectors are lagging the entire benchmark this quarter, led by Real Estate, down 2.1%; Consumer Discretionary, off 2.0%; and Health Care, lower by 1.5%.

— Scott Schnipper

Inflation still 'irritatingly high,' says Bankrate's Hamrick

With the consumer price index showing inflation slightly eased in April, the "lack of a nasty surprise" was welcome, unlike March's disappointingly high readings, said Mark Hamrick, senior economist at Bankrate.

That said, interest rates will still remain higher for longer, he noted.

"With the 3.4% year-over-year headline increase and 3.6% in the core (excluding food and energy), these remain irritatingly high," Hamrick said. "The status of the battle against inflation requires that interest rates remain elevated in the near-term."

— Michelle Fox

The clean energy stock rally this week was not a reaction to China tariffs, Raymond James says

Several clean energy stocks have rallied this week, in some cases with no company-specific news, leaving some investors to question what was behind the gains.

Pavel Molchanov, stock analyst at Raymond James, said Tuesday's rally was not a reaction to the U.S. slapping tariffs on China. Some of the stocks that bounced have no link to tariff policy, Molchanov said.

The bounce yesterday "was simply a meme stock rally, with the most heavily shorted stocks gaining the most," the analyst told clients in a research note Wednesday.

Residential solar company SunPower saw some of the strongest gains in the clean tech space, rallying 34% since the start of the week.

"Yesterday clean tech investors got a reminder — if any were needed — of just how emotionally these stocks can move on a day-to-day basis," Molchanov said.

— Spencer Kimball

S&P 500 took 48 days to make a new high this time. Last time took 746 days

They come in bunches.

When the S&P 500 closed at a new all-time high, 4,839.81, on Jan. 19, 2024, it had taken 746 days since the last record close of 4,796.56 back on Jan. 3, 2022. Then came tighter Federal Reserve interest rate policy to fight the highest inflation in 40 years, followed by brutal bear markets in both stocks and bonds in 2022.

But in January of this year, the S&P 500 closed at new all-time highs five times. In February, the S&P 500 registered new closing highs seven times, including closing above 5,000 for the first time on Feb. 9.

In March, the S&P 500 closed at a new closing high eight times, including closes above 5,100 for the first time on March 1, above 5,200 for the first time on March 20, then finally reaching what had until today stood as the all-time high, at 5,254.35 on March 28.

From late March to mid-May, it took less than seven weeks, 48 days to be exact, for the S&P 500 to reach another record once again.

— Scott Schnipper

April inflation 'consistent with the Fed cutting interest rates in September,' Capital Economics says

April's weaker growth in core consumer prices in the U.S., stripping out volatile food and energy costs, shows that the "outlook for core goods inflation remains subdued," which will allow central bank policymakers in developed economies to start easing interest rates sooner rather than later, Capital Economics researchers in London wrote Wednesday.

"We still expect inflation in [developed markets] to be broadly back at central bank targets by the end of this year," wrote senior global economist Ariane Curtis. "In anticipation of this, we expect the ECB and Bank of England to begin cutting interest rates in June, followed by the Fed in September."

"The slightly more modest 0.3% m/m increase in core CPI in April was even better than it looked," wrote chief North America economist Paul Ashworth. The Federal Reserve's preferred PCE inflation gauge will probably rise 0.2% in April from March, he said.

"[T]he annual rate of all items inflation fell to 3.4%, from 3.5%, with core inflation down to 3.6%, from 3.8%. All things considered, this is consistent with the Fed cutting interest rates in September, particularly in light of the reported softness in control group retail sales last month," Ashworth concluded.

— Scott Schnipper

Consumer discretionary stocks lag

Consumer discretionary stocks in the S&P 500 bucked the broad index's uptrend on Wednesday.

The S&P 500 traded around all-time highs in Wednesday's session, last up about 1%. All sectors that comprise the benchmark index traded either near flat or clearly higher with the exception of consumer discretionary, which slipped 0.4%.

Hasbro led the sector lower with a slide of more than 3%, while CarMax and Amazon followed with drops of more than 1.5% each. On the other hand, D.R. Horton was the best performer in the sector, helping to mitigate losses with a rally of more than 5%.

— Alex Harring

Albemarle pacing for second 'outside day' in a week

Lithium giant Albemarle is in danger of posting its second bearish "outside day" in the past week, if it closes below $132.87 per share.

Albemarle fell during morning trading after popping at the open and is on pace for its worst day since April 12, 2024, when it fell nearly 6%. The catalyst for the move Wednesday was unclear but pushed shares negative week to date, with the stock now on pace to break a three-week win streak.

An outside day is a two-day technical trading pattern in which the second day's trading range fully engulfs the prior day's range. Technicians often use the pattern to predict reversals in an asset's trading direction.

— Nick Wells

65 stocks in the S&P 500 hit new 52-week highs

During Wednesday's trading session, 65 stocks in the broader S&P 500 index hit new 52-week highs.

Here are some of the names that hit this milestone:

• Kinder Morgan
• Citigroup
• L3Harris Technologies
• Analog Devices
• Motorola Solutions
• Qualcomm
• Edison International
• Texas Instruments

— Lisa Kailai Han, Christopher Hayes

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading:

GameStop, AMC Entertainment — The so-called meme stocks retreated significantly after a two-day rally. GameStop declined about 30%, while AMC dropped 20% as the trading frenzy seemed to fade. The sell-off in AMC shares also came after the company announced a debt-for-equity swap. Before Wednesday, GameStop and AMC were up 179% and 135% this week, respectively.

Boeing — Shares slipped 1.7% after the Justice Department said the airplane manufacturer broke a 2021 settlement that protected it from criminal charges related to two fatal 737 Max crashes. Boeing, which is now exposed to potential prosecution, denies the claims.

The full list can be found here.

— Hakyung Kim

Inflation will keep cooling as readings for shelter, auto insurance fall, economist says

Wednesday's cooler CPI reading helped calm fears about inflation reheating, but some economists had shrugged off recent inflation data and held firm in their predictions that inflation will come down.

Luke Tilley, chief economist for Wilmington Trust Investment Advisors, said on Tuesday ahead of the report that inflation was still mainly being driven by shelter prices and auto insurance.

"Those are not being driven by really strong consumer spending. The real concern about inflation is that consumers are so strong, spending on all these items, and that is just not the case," Tilley said.

Inflation readings for auto insurance and shelter appear to be operating on lags, Tilley said. He compared the CPI shelter reading to a Zillow index, which has already fallen back to pre-pandemic levels.

In the April CPI report, shelter inflation was unchanged with a rise of 0.4% month over month. Transportation services, which includes insurance, rose 0.9%, which was down from 1.5% in March.

"I don't see any reason to expect anything but lower inflation," Tilley said.

— Jesse Pound

CPI report should be 'welcome news' for investors, says Global X's Scott Helfstein

April's inflation report bodes good news for the market, according to Scott Helfstein, head of investment strategy at Global X.

"There are a lot of things that investors could worry about, but inflation isn't among them," Helfstein said in a note to clients on Wednesday. "The Fed has made progress towards the 2% goal, and the current inflation readings is not really worrisome. This probably means that the Fed probably keeps rates higher for longer and that is fine."

Helfstein said he continues to believe that the central bank moves on "clear evidence" that inflation is below 3% and moving toward 2%, which is not true given that consumer prices rose 3.4% on a 12-month basis. "This should be welcome news to investors," he said.

— Pia Singh

Fed 'is not out of the woods yet,' Regan Capital chief investment officer says

The Federal Reserve has "breathing room" to cut rates as early as September following Wednesday's inflation data, but the central bank's path is not set yet, according to Skyler Weinand, chief investment officer at Regan Capital.

"We're still a far cry from the Fed's desired 2% inflation level and the economy remains strong, so we'll need a few more weak inflation prints to give the Fed the green light on lowering rates," said Weinand. "The Federal Reserve is not out of the woods yet."

— Alex Harring

BMO hikes S&P 500 target to new Street high

BMO Capital Markets strategist Brian Belski now has the highest S&P 500 target on Wall Street after hiking his to 5,600 from 5,100.

"It has become clear to us that we underestimated the strength of the market momentum," Belski said in a note to clients.

The new target is more than 6% above where the S&P 500 closed on Tuesday.

— Jesse Pound

Positive CPI data outweighs flat retail sales, says investor

The consumer price index's lower-than-expected increase in April resulted in a positive market reaction. Meanwhile, retail sales came in flat on the month versus the forecast 0.4% rise, suggesting consumers felt pressure from the pace of the price increases.

"Although a slowdown in spending could turn into a problem for the economy, in the immediate term it takes some pressure off the Fed and that is what has been moving bond and stock markets the past couple of months," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

"We believe we are still in a Bull Market, so we expect the knee-jerk negative reaction on the Retail Sales miss to be overcome by the relatively good news on the CPI data which is at or below expectations," he added.

— Hakyung Kim

New York Stock Exchange advancers lead decliners 4-1

About four stocks at the New York Stock Exchange rose for every decliner on Wednesday, as the S&P 500 reached record highs. Overall, roughly 2,000 NYSE-listed names advanced, while 550 slipped, FactSet data shows, pointing toward conviction from traders in the move higher.

— Fred Imbert

S&P 500, Nasdaq open at new all-time high

Following a lighter-than-expected inflation report, the S&P 500 and Nasdaq Composite opened at new all-time highs during Wednesday's trading session.

The broader market index added 0.4%, while the tech-heavy Nasdaq increased 0.6%. The Dow Jones Industrial Average gained 182 points, or 0.5%.

— Lisa Kailai Han

AMC, Nio among stocks making biggest premarket moves

Check out the companies making headlines before the bell:

AMC Entertainment, GameStop — AMC and GameStop shares fell in early morning trading as momentum fizzled from the meme stock craze, which was reignited Monday by a social media reappearance from "Roaring Kitty." AMC shares were down more than 7% after the movie theater chain announced it will issue more than 23 million shares "in exchange for $163,850,000 aggregate principal amount of its 10%/12% Cash/PIK Toggle Second Lien Subordinated Notes due 2026." GameStop shares slid 6%.

Nio — Shares advanced 3.3% after JPMorgan upgraded the Chinese electric vehicle maker to neutral from underweight. The stock, which has soared over the past month, could benefit from Chinese government stimulus policy and Nio's latest battery as a service, or BaaS, strategy, which could drive sales, the bank said.

Dell — The technology company rose about 2% after Morgan Stanley raised its price target on the stock. The bank said Dell is "gaining momentum" with enterprise clients, including for artificial intelligence server demand.

For the full list, read here.

— Pia Singh

Consumer prices rose less than expected in April

The consumer price index rose 0.3% in April, slightly less than anticipated, lifting hope for Federal Reserve rate cuts in the near future. CPI was expected to have risen 0.4% in the month, per Dow Jones.

Year over year, CPI rose 3.4%, matching expectations. Core CPI, which strips out food and energy prices, rose 0.3% month on month and 3.6% year over year, both in line with expectations.

— Fred Imbert

Petrobras shares slide after announcing CEO change

The U.S.-traded shares of Brazil's Petrobras sank 8% in premarket trading after the company announced a CEO change under political pressure.

The energy giant disclosed on Tuesday that CEO Jean Paul Prates had sent a request to negotiate his departure as CEO, and that the government agency overseeing the company had already chosen a replacement.

"The Brazilian government's decision to replace PBR's CEO Prates with former energy regulator Magda Chambriard appears to be an escalation of the push to intervene in the company," Jefferies analyst Alejandro Anibal Demichelis said in a note to clients. Jefferies downgraded Petrobras to hold from buy.

— Jesse Pound

'Tight' consensus could cause big moves upon Wednesday's inflation reading

April's consumer price index reading is due at 8:30 a.m. ET on Wednesday, and Wolfe Research expects the market to have a sharp reaction.

"Consensus is very tight once again heading into this morning's report, and our sense is that even a modest upside or downside surprise could cause sharp short-term moves in stock prices," wrote chief investment strategist Chris Senyek.

However, the strategist added that despite the potential moves in either direction, he is not wavering from his current market outlook.

"While this morning's CPI report could spark some big near-term moves, we don't anticipate turning bearish until it's clear that either (1) the U.S. is heading for recession, or (2) the Fed will hike to tame inflation. Neither are part of our base case!" he wrote.

— Lisa Kailai Han

AMC slides after stock issuance announcement

AMC shares were down more than 1% in the premarket after the movie theater chain announced it will issue more than 23 million shares "in exchange for $163,850,000 aggregate principal amount of its 10%/12% Cash/PIK Toggle Second Lien Subordinated Notes due 2026."

The stock has been on a tear this week, as the meme craze returned to Wall Street. Shares are up more than 135% week to date.

— Fred Imbert

What to expect from CPI

The consumer price index report is slated for release at 8:30 a.m. ET, and investors will comb through the numbers for clues on when the Federal Reserve may cut interest rates.

According to economists polled by Dow Jones, CPI is expected to have increased 0.4% month over month and 3.4% year on year for April. Core CPI, which strips out food and energy prices, is forecast to have grown 0.3% month on month and 3.6% year on year.

One area that could be of interest for investors is housing, as pricing pressures in the space persist.

"The slower it comes down, the longer the path towards the Fed's inflation target," said Erica Groshen, senior economics advisor at Cornell's School of Industrial and Labor Relations. "We're not seeing any big shifts in the housing market that would make me think it's just now going to act differently. Demographics are slow to change. So I don't really see an explanation for housing to react very differently than it has in the past."

— Fred Imbert, Jeff Cox

European markets open higher

European markets opened higher Wednesday following the Nasdaq's record close, with the pan-European Stoxx 600 index rising 0.3%.

The U.K.'s FTSE 100 index was up 0.5% at 8,470, Germany's DAX up 0.3% at 18,781, France's CAC 0.3% higher at 8,249 and Italy's FTSE MIB up 0.5% at 35,315, according to data from IG.

— Karen Gilchrist

Rakuten shares fall 4% as company posts 15th straight quarter of losses

Shares of Rakuten Group dipped 4% on Wednesday after the Japanese technology conglomerate reported a net loss for a 15th straight quarter.

Financial results by the internet conglomerate released Tuesday showed an operating loss of 25.4 billion yen in the January to March quarter

The company said its mobile business logged a smaller operating loss of 71.9 billion yen compared with last year amid cost cuts and higher subscription growth.

The company's financial unit, which consists of online banking, brokerage, credit card and insurance services, saw operating profits rise 47% from a year earlier to 39.3 billion yen.

— Charmaine Jacob

Sharp shares fall 9% to near 1-month low after company posts annual loss of $959 million

Sharp Corp shares plunged as much as 9.4% to their lowest level in nearly one month after electronics and LCD display maker posted an annual loss.

The company recorded a 149.9 billion yen ($958.7 million) loss for financial year ended March 2024. It had reported an annual loss of 260.8 billion yen in the previous year.

Sharp said the loss was mainly due to an impairment cost related to its Display Device segment.

"Net sales, operating profit and ordinary profit fell below previous forecast due to lower-than-anticipated demand for small and medium-sized displays for smartphones, PCs, and tablets, as well as delay of patent revenue recognition into the following fiscal year," the company said in a statement.

— Shreyashi Sanyal

Australia announced its annual budget, aims to ease cost of living

Australia's government announced its annual budget late Tuesday, with measures aimed at easing cost of living, building more homes, and strengthening its healthcare system, among other things.

"This budget strikes the right balance between keeping pressure off inflation, delivering cost of living relief, supporting sustainable economic growth and strengthening public finances," Jim Chalmers, Treasurer of Australia said in a joint statement with Australia's prime minister, Anthony Albanese.

The government forecast a second surplus in 2023–24, "which would be the first time a government has delivered back‑to‑back surpluses in nearly two decades," Chalmers said.

— Shreyashi Sanyal

Justice Department says Boeing violated deal protecting it from criminal charges over 737 Max crashes

Boeing shares fell about 1% in extended trading after the Justice Department said that the aircraft maker broke a 2021 agreement that shielded the company from criminal charges related to past 737 Max crashes.

The department said in a filing that the company violated the agreement by "failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations."

Boeing will have 30 days to respond to the filing and could face prosecution.

— Leslie Josephs, Samantha Subin

Stocks making the biggest moves after the bell

Here are some of the stocks making the biggest moves after the bell:

• Boot Barn — The western apparel and footwear stock slid 7% after issuing light revenue and earnings guidance for the full year.
• Nextracker — The solar technology stock popped 9%. Nextracker posted $737 million in revenue for the fiscal fourth quarter, topping an LSEG estimate of $682 million.

Read the full list of stocks on the move here.

— Samantha Subin

Stock futures open little changed

Stock futures were little changed in overnight trading Tuesday.

Futures tied to the Dow Jones Industrial Average inched down 6 points, while S&P 500 futures and Nasdaq 100 futures hovered near the flatline.

— Samantha Subin