Stock market today: S&P 500 breaches 5,300 as stocks rally to records after CPI

US stocks rallied on Wednesday, with all three major indexes closing at record highs as a soft reading on consumer prices fueled hopes that the Federal Reserve could cut interest rates sooner than expected.

The S&P 500 (^GSPC) rose nearly 1.2%, closing at 5,308.18, above 5,300 for the first time ever. The Dow Jones Industrial Average (^DJI) jumped about 0.9%, or almost 350 points, creeping closer toward the 40,000 level. The tech-heavy Nasdaq Composite (^IXIC) climbed about 1.4%, notching its second record close in as many days.

The Consumer Price Index rose 0.3% over the previous month and 3.4% over the prior year in April, a deceleration from March. "Core" inflation — which strips out the cost of food and gas — also cooled.

The relatively cool inflation reading led the 10-year Treasury yield (^TNX) to fall 4.35%, its lowest level in a month, and sparked new bets on Fed rate cuts as soon as September. According to the CME FedWatch Tool, around 70% of traders now expect at least one cut by the September meeting, a notable increase from a week ago.

Stocks have ground higher amid rekindled confidence that the US economy is in good enough shape for the Federal Reserve to start bringing down rates from their current historic highs. That optimism has fueled a resurgence in bullishness in the market.

Elsewhere on the macroeconomic front, retail sales fell flat — exactly — last month, coming in well short of Wall Street's expectations.

Read more: How does the labor market affect inflation?

Meanwhile, the pace slackened in the frenzied meme stock rally that saw GameStop (GME) and AMC (AMC) prices more than double at one point on Tuesday. Both stocks dropped about 20% on Wednesday.

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S&P 500 hits first record since March

Wed, 15 May 2024 at 4:15 pm GMT-4, Josh Schafer

The S&P 500 (^GSPC) rose nearly 1.2%, closing at 5,308.18, above 5,300 for the first time ever.

The other two major averages, the Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC), also hit records.

And the list goes beyond that. Financials (XLF), Technology (XLK), and Industrials (XLI) all also notched their highest closes on Wednesday too.

Netflix ad tier reaches 40 million users

Wed, 15 May 2024 at 3:15 pm GMT-4, Alexandra Canal

Netflix (NFLX) told advertisers at its second Upfront presentation on Wednesday that its ad tier has reached 40 million global monthly active users — a significant jump from the 15 million users the company revealed back in November and a 35 million increase compared to the year-ago period.

The ads plan now accounts for over 40% of all Netflix sign-ups in the markets it's offered in.

“Our audiences are highly engaged — and by engaged I mean that they are choosing to spend their time watching Netflix," the company's content chief Bela Bajaria said on Wednesday.

According to the streamer, over 70% of Netflix’s ad-supported members watch for more than 10 hours a month — 15 percentage points higher than the nearest competitor, Netflix said, citing Nielsen data.

To note, monthly active users, otherwise known as MAUs, are not the same as paying subscribers. The company has yet to reveal actual subscriber figures for the ad tier, or how much revenue it's generated so far. MAUs can include multiple people using the same account.

In addition to the user updates, the company also announced a new in-house technology platform, which will give advertisers alternative ways to buy ads and measure impact.

“Bringing our ad tech in-house will allow us to power the ads plan with the same level of excellence that’s made Netflix the leader in streaming technology today,” Amy Reinhard, Netflix’s president of advertising, said during the presentation.

Additionally, the streamer will further leverage live events, revealing that energy drink company Celsius will be the first presenting sponsor for the Jake Paul vs. Mike Tyson event, which will stream live on the platform this July.

Brand partners for the event will be featured throughout the broadcast, the company said.

The Upfront news comes after Netflix said earlier on Wednesday that it won the streaming rights to two National Football League (NFL) games set to air Christmas Day as part of a three-season deal.

Builder confidence posted its first decline since November 2023

Wed, 15 May 2024 at 3:05 pm GMT-4, Dani Romero

Homebuilders aren’t feeling too confident about the housing market amid rising mortgage rates.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) fell to 45 in May, down 6 points from April’s figure, marking the first decline since November 2023. Economists polled by Bloomberg were anticipating a reading of 50.

Any number under 50 indicates that more builders view conditions as poor than good.

Mortgage rates are largely to blame as rates averaged above 7% for the past four weeks, pushing borrowers to the sidelines. The average rate on the 30-year fixed mortgage rate stayed at 7% last week, settling at 7.09%, according to Freddie Mac.

Higher borrowing costs pushed 25% of builders to cut home prices to increase sales in May. At the same time, 59% of builders increased their sale incentives in May from 57% in April.

“A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment,” NAHB chief economist Robert Dietz wrote in a press release. “The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”

10-year Treasury yield hits lowest level in a month

Wed, 15 May 2024 at 2:41 pm GMT-4, Josh Schafer

The 10-year Treasury yield (^TNX) slipped about 10 basis points to 4.34%, its lowest level since April 10.

The move came as soft inflation data and a weak reading on consumer spending pushed markets to price in two Federal Reserve interest rate cuts this year, for the first time since early April.

A rise in yields had been a headwind for stocks in April. And now that correlation has continued, with the major stock indexes hitting record highs on Wednesday as upward pressure in yields continued to abate.

Trending tickers on Wednesday afternoon

Wed, 15 May 2024 at 1:59 pm GMT-4, Josh Schafer

Nvidia (NVDA) led the Yahoo Finance trending tickers page on Wednesday afternoon, with shares up more than 3% following a slew of bullish analyst commentary leading into the company's earnings report next week. The stock is now up more than 90% year to date.

Dell Technologies (DELL) stock gained more than 8% on Wednesday as Morgan Stanley upped its price target to $152 from $128, noting Dell's "AI server and storage businesses are seeing more momentum than we had previously assumed."

Super Micro Computer (SMCI) stock jumped nearly 12% amid the AI enthusiasm in markets on Wednesday as the Technology sector (XLK) led the gains in the S&P 500, rising more than 2%.

Magnificent 7 index hits an all-time high

Wed, 15 May 2024 at 1:10 pm GMT-4, Josh Schafer

The Roundhill Magnificent Seven ETF (MAGS) hit an all-time high on Wednesday.

The ETF, which was launched in April 2023, tracks the "Magnificent Seven" stocks: Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA). It's up about 5.2% in the past month, outpacing the S&P 500's 4.7% gain.

The Magnificent Seven's rise, coinciding with an increase in the broader market, has been a feature of the market rally over the past year. But what sticks out this time around is another shift in what's driving the Magnificent Seven trade.

On Feb. 28, we wrote that Nvidia, Meta, and Amazon were leading, with the other four tech stocks slowly falling off.

In the past month, this has changed yet again. Nvidia is still a top gainer, adding 9.8% in the last month. But Alphabet has been the best performer in the group, gaining 10.6%, while Apple has added 10.3%.

Rate-sensitive stocks outperforming on Wednesday

Wed, 15 May 2024 at 12:19 pm GMT-4, Josh Schafer

A combo of economic data releases that showed inflation cooling and softening consumer spending has investors more optimistic about interest rate cuts this year.

Markets are now pricing in two rate cuts this year, a move higher from the low of one seen in April.

This sentiment has played out in stocks on Wednesday, with interest rate-sensitive areas seeing the largest rises during the trading day.

The small-cap Russell 2000 Index (^RUT) is up nearly 1%, just edging out the 0.8% increase seen in the S&P 500 (^GSPC). Within the benchmark index, Real Estate (XLRE), Technology (XLK), and Utilities (XLU), all sectors that are considered to be interest rate-sensitive, are leading the sector action.

Source: Yahoo Finance

BMO's Brian Belski projects 5,600 for S&P 500 at year end, the highest call on Wall Street

Wed, 15 May 2024 at 11:14 am GMT-4, Josh Schafer

Wall Street's top expectation for stock market returns in 2024 keeps moving higher.

BMO Capital Markets chief investment strategist Brian Belski boosted his year-end price target for the S&P 500 (^GSPC) to 5,600 from 5,100 in a research note on Wednesday, noting that momentum in the market is "likely to persist." Belski's 5,600 target reflects about 7% upside from Monday's close.

"We are comfortable with this because we believe the market is behaving in a similar fashion to 2021 and 2023 – years where we did not give enough credit to the strength of market momentum, something we are trying to avoid this time around," Belski wrote in a research note.

Belski is the latest in a string of Wall Street strategists to chase the 2024 stock market rally higher with a boosted year-end target. The high-water mark on the Street entering the year was 5,200, with the median strategist target projecting the benchmark average to end the year at 4,850.

But as earnings have grown more than expected and US economic growth has largely surprised to the upside, 10 of the 15 strategists tracked by Yahoo Finance are now at or above 5,200 on the year-end targets.

Netflix strikes three-season NFL deal

Wed, 15 May 2024 at 10:19 am GMT-4, Alexandra Canal

Netflix (NFLX) has won the streaming rights to two National Football League (NFL) games set to air Christmas Day, the company announced in a post on X Wednesday morning.

It's a surprising development given the streaming giant has previously said it wanted to avoid investing in live sports content.

The doubleheader matchups will be announced once the NFL releases its full schedule Wednesday evening. The company will reportedly pay less than $150 million per game, according to Bloomberg.

In addition to this year's games, the company also revealed it will be streaming at least one holiday game per year as part of a three-season deal.

"Last year, we decided to take a big bet on live — tapping into massive fandoms across comedy, reality TV, sports, and more," Netflix's content chief, Bela Bajaria, said in a news release. "There are no live annual events, sports or otherwise, that compare with the audiences NFL football attracts. We’re so excited that the NFL’s Christmas Day games will be only on Netflix."

Netflix had previously maintained that it wants to focus on "sports entertainment" instead of paying for the rights to live sports, which can be expensive for media companies. In the past, the company has released docuseries and sports-adjacent content like "The Quarterback," "Formula 1: Drive to Survive," "Full Swing," and "Break Point," in addition to live sporting events like the "Netflix Cup" celebrity golf tournament, which aired late last year.

One recently announced partnership seemed to deviate from that status quo. In January, Netflix announced a 10-year deal with TKO Group Holding's WWE (TKO) that will bring WWE’s flagship program Raw, a live wrestling production, to the streaming service beginning in 2025.

But at the time, Netflix co-CEO Ted Sarandos said the inclusion of the program did not signal a change in its overall sports strategy, describing the deal as "unique" compared to the global sports rights of professional leagues like the NBA or UFC.

Wall Street analysts and industry watchers have long predicted Netflix will eventually be forced to go all-in on sports, describing live sports as the last frontier of streaming amid a deteriorating cable bundle.

Read more here.

GameStop tanks 25% as meme stock rally fades

Wed, 15 May 2024 at 10:15 am GMT-4, Ines Ferré

GameStop shares (GME) tanked more than 25% Wednesday as a rally among meme-related stocks appears to be unwinding.

GameStop stock gained more than 180% in the prior two sessions amid a massive short squeeze following the reemergence of Keith Gill, also known as "Roaring Kitty," whose bull case on GameStop ignited the meme stock rally back in 2021.

AMC (AMC) shares also fell about 20% Wednesday after the theater chain operator rose 95% over the last two days. Other heavily shorted stocks that fell Wednesday included SunPower (SPWR), down 29%. Shares of Beyond Meat (BYND) and The Children's Place (PLCE) also dropped.

The pain short sellers endured during the original meme stock rally three years ago didn't deter bets against these companies in recent days.

Short interest in GameStop remained elevated since that meme rally, data from S3 Partners showed, with almost 24% of the float.

GameStop shorts were down $1.36 billion on Tuesday after losing almost $900 million on Monday.

"We are seeing continued squeeze related short covering due to the rebirth of the meme trade," said Ihor Dusaniwsky, managing director of S3 Partners.

However, Wall Street strategists have predicted the recent burst of enthusiasm is far from the meme madness of three years ago.

Stocks head for record after soft inflation, retail sales print

Wed, 15 May 2024 at 9:34 am GMT-4, Josh Schafer

US stocks rose on Wednesday, eyeing fresh record highs as a soft reading on consumer prices fueled hopes that the Federal Reserve could cut interest rates sooner than expected.

The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) jumped about 0.4% at the open. The tech-heavy Nasdaq Composite (^IXIC) climbed about 0.5%, after hitting a record close on Tuesday.

Both the Nasdaq and S&P 500 were on track for record closes if they maintained their gains throughout the trading session.

Retail sales flat in April, falling short of Wall Street's expectations

Wed, 15 May 2024 at 8:54 am GMT-4, Josh Schafer

The US consumer showed signs of slowing in April.

Retail sales were flat in the month, according to data from the Commerce Department, furthering concerns about the state of the consumer amid sticky inflation and higher interest rates.

This marked a slowdown from the 0.6% month-over-month increase seen in March. Economists had expected a 0.4% increase in spending, according to Bloomberg data.

Excluding autos and gas, retail sales declined by 0.1% last month; expectations had been for a 0.1% increase.

Inflation pressures ease in April

Wed, 15 May 2024 at 8:52 am GMT-4, Alexandra Canal

US consumer price increases cooled during the month of April, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.

The Consumer Price Index (CPI) rose 0.3% over the previous month and 3.4% over the prior year in April, a slight deceleration from March's 3.5% annual gain in prices and 0.4% month-over-month increase.

April's monthly increase came in lower than economist forecasts of a 0.4% uptick. The annual rise in prices matched estimates, according to data from Bloomberg.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in April climbed 0.3% over the prior month and 3.6% over last year — cooler than March's data. Both measures met economist expectations.

Well, at least valuations aren't too stretched

Wed, 15 May 2024 at 5:12 am GMT-4, Brian Sozzi

As we witness GameStop (GME) up another 8% premarket, it's worth noting that wild bubble moves like this aren't spreading throughout the broader market.

That could be captured in this nifty new valuation chart from Goldman Sachs this morning.

Compelling valuations still out there? (Goldman Sachs)