NEW YORK — On a quiet Wednesday in New York, U.S. stock markets saw modest gains, with the S&P 500 further extending its record high.
The S&P 500 rose by 0.2%, following a previous day’s peak, while the Dow Jones Industrial Average increased by 71 points, also a gain of 0.2%. The Nasdaq composite experienced a slight rise of 0.1%.
A key contributor to the S&P 500’s upward movement was Microsoft, which saw its stock climb 1.3% after announcing the creation of what it calls the world’s first “quantum processing unit.” This innovation has the potential to pave the way for more powerful computers. Although this increase was relatively modest, Microsoft’s substantial market size means its stock movements carry significant influence on the S&P 500 and other indices.
Another significant boost came from Analog Devices, which surged by 9.7%. The semiconductor manufacturer exceeded analysts’ profit expectations for its latest quarter, despite what CEO Vincent Roche referred to as a “challenging macro and geopolitical backdrop.”
Tesla, led by Elon Musk, gained 1.8% as another electric vehicle firm, Nikola, saw its shares plummet by 39.1% after filing for Chapter 11 bankruptcy protection. Nikola’s plan involves liquidating its assets and ceasing operations.
This positive momentum helped counterbalance a notable drop of 21.5% for Celanese. The chemical company fell despite reporting a profit that surpassed analysts’ estimates for the end of 2024. CEO Scott Richardson warned of a “demand deterioration” that showed no signs of improvement in the last quarter of the year, particularly affecting core markets including automotive, construction, and paint sectors.
In the housing sector, Toll Brothers faced a 5.9% decline after it reported profit figures that disappointed analysts. CEO Douglas Yearley Jr. highlighted that while the spring selling season has seen decent demand for higher-end homes, “affordability constraints” have hindered sales in the lower price ranges.
A separate report indicated that U.S. homebuilders started fewer new houses last month than expected by economists. High mortgage rates continue to pose a barrier for potential homebuyers, even as the Federal Reserve initiated rate cuts in September to help stimulate the economy.
Consequently, mortgage rates have aligned with the fluctuating long-term Treasury yields, which remain high due to the resilience of the U.S. economy and unchecked inflation levels. Concerns about tariffs proposed by President Trump, along with other inflationary policies, have led to volatility in the bond market.
On Wednesday, the yield on the 10-year Treasury fell slightly to 4.53% from 4.55% at the end of Tuesday. Just a month ago, it was below 3.70% and had approached 4.80% in recent weeks.
Market participants have shown a more subdued response to Trump’s tariff threats, compared to earlier reactions, suggesting a hope that the threats are a negotiation tactic rather than a precursor to severe economic impacts.
Overall, the S&P 500 rose by 14.57 points to close at 6,144.15, with the Dow Jones Industrial Average reaching 44,627.59 after adding 71.25 points and the Nasdaq composite gaining 14.99 points, finishing at 20,056.25.
Such restrained market responses, however, could lead to increased volatility if conditions diverge from Wall Street’s expectations or if it encourages Trump to implement more aggressive measures.
The Federal Reserve has indicated a cautious approach moving forward, suggesting fewer rate cuts may occur this year than previously anticipated, primarily due to inflation concerns remaining above its 2% target. While rate reductions can stimulate economic growth and enhance investment returns, they may also contribute to rising inflation.
Minutes from the Fed’s January policy meeting revealed discussions among officials regarding the influence of Trump’s proposed tariffs and immigration policies, as well as strong consumer spending on potential inflation increases this year.
Internationally, London’s FTSE 100 index dropped 0.6% following a report that U.K. inflation reached a 10-month peak, putting pressure on the Bank of England to react.
Other European markets saw declines exceeding 1%, particularly in France and Germany, following a mixed performance in Asia, where South Korea’s Kospi rose by 1.7% and Japan’s Nikkei 225 fell by 0.3%.
