US stock market: Another record high! Tesla shares, Fed chair's comments behind the rally

The broad-based S&P 500 climbed 0.6 per cent to 5,509.01 on Tuesday (July 2). The tech-heavy Nasdaq Composite Index rose 0.8 per cent to 18,028.76. These are record levels for both the indices. The Dow Jones Industrial Average advanced 0.4 per cent to 39,331.85

Wall Street stocks surged on Tuesday (July 2) catapulting major indices to unprecedented highs. This bullish movement was fuelled by remarks from Federal Reserve Chair Jerome Powell, which suggested the likelihood of interest rate reductions. A significant rise in Tesla’s shares also contributed to the market’s upswing. The broad-based S&P 500 climbed 0.6 per cent to 5,509.01, setting a new record. The tech-heavy Nasdaq Composite Index also hit a record, rising 0.8 per cent to 18,028.76. The Dow Jones Industrial Average advanced 0.4 per cent to 39,331.85. Market movers Tesla stocks led the charge with a remarkable 10.2 per cent increase after the electric vehicle manufacturer reported a smaller-than-expected decline in spring sales. Other major stocks posted modest gains, including a 1.6 per cent rise in Apple shares. Paramount Global shares soared over 5.5 per cent following news that Barry Diller’s IAC was considering a bid to take control of the media giant. On the downside, Eli Lilly saw a 0.8 per cent drop, and US-listed shares of Novo Nordisk fell 1.7 per cent. This came after President Biden criticised the companies in a USA Today opinion piece for their pricing of weight loss and diabetes drugs. Fed chair’s comments Comments from Federal Reserve Chair Jerome Powell have led investors to believe there is a higher chance of interest rate cuts. “We’ve made quite a bit of progress in bringing inflation back down to our target, while the labor market has remained strong and growth has continued,” Powell said. “We want that process to continue.” “We just want to understand that the levels that we’re seeing are a true reading of underlying inflation,” he said at a panel discussion with other central bankers in Portugal. Wall Street hopes that slowing inflation will persuade the Fed to lower its main interest rate, which remains at its highest level in over two decades, curbing economic expansion. Treasury yields have been on a downward trend since April in anticipation of such cuts. Treasury yields Following Powell’s comments, Treasury yields initially fell but later trimmed their losses after a job openings report. The 10-year Treasury yield stood at 4.42 per cent, down from 4.46 per cent on Monday. The easing of Treasury yields since April reflects market expectations for potential interest rate reductions. With inputs from agencies