S&P 500, Nasdaq rise as banks advance; Fed meet in focus

By Sruthi Shankar and Shristi Achar A

(Reuters) – The and Nasdaq rose on Tuesday as banks led a rally in economically sensitive sectors, while investors awaited inflation data and the Federal Reserve’s policy meet next week.

Inflation data is expected to show consumer prices cooled slightly on a month-over-month basis in May but core prices are likely to have remained elevated, while the Fed is widely expected to hold interest rates.

Financials rose 1.2% to lead gains among the 11 major S&P 500 sectors, while the KBW regional banking index jumped 6.1%. The index of small-cap companies added 2.8%.

“You are seeing cyclical parts of the market like financials, machinery, consumer discretionary having some market leadership which is good to see,” said Matt Stucky, senior portfolio manager at Northwestern (NASDAQ:) Mutual Wealth Management Company.

“If this were to continue, that would probably be a good sign that the trajectory that the market this year is on a more sustainable path.”

The benchmark S&P 500 has bounced almost 20% from its October 2022 lows, boosted by gains in megacap stocks, a stronger-than-expected earnings season and hopes that the U.S. central bank is nearing the end of its interest rate-hike cycle.

Recent economic data and dovish remarks from the Fed officials have raised the odds of the Fed holding interest rates at its June 13-14 meeting.

Fed fund futures indicate traders have priced in a near 80% chance that the central bank will hold interest rates in the 5%-5.25% range, according to CMEGroup’s Fedwatch tool. However, they see 50% odds of another 25-basis-point rate hike in July.

At 12:24 p.m. ET, the was down 36.20 points, or 0.11%, at 33,526.66, the S&P 500 was up 5.73 points, or 0.13%, at 4,279.52, and the was up 47.14 points, or 0.36%, at 13,276.57.

The CBOE volatility index hit its lowest since July 2021, down 0.5 point at 14.27.

Coinbase (NASDAQ:) Global plunged 11.1% after the U.S. Securities and Exchange Commission sued the crypto exchange, accusing it of illegally operating without having first registered with the regulator.

Apple Inc (NASDAQ:) extended losses to slip 0.6%, a day after the iPhone maker unveiled a costly augmented-reality headset called the Vision Pro, barging into a market dominated by Meta.

Advanced Micro Devices (NASDAQ:) rose 4.6% after Piper Sandler raised the price target on the stock to $150, the second highest on Wall Street, as per Refintiv data.

Advancing issues outnumbered decliners by a 3.49-to-1 ratio on the NYSE and by a 2.70-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and four new lows, while the Nasdaq recorded 86 new highs and 52 new lows.