U.S. Stocks Reached New Record Highs on June 14

The U.S. stocks, the Nasdaq Composite, and the S&P 500 reached new record highs on June 14 as investors poured into resurgent tech stocks ahead of the Federal Reserve’s Wednesday policy announcement. Investors’ interest in tech stocks is an important factor. That means Wall Street expects the central bank will continue its policy to bolster economic recovery.

The tech-heavy Nasdaq Composite gained 0.7% on Wednesday to 14,174 points. It surpassed its latest closing record of 14,211 points on April 29. Meanwhile, the S&P 500 extended a Friday closing high, ticking up 0.1% thanks to biotech firms and software giants. Resmed, Adobe, as well as Salesforce, jumped 6%, 3%, and 2.7% respectively.

In the meantime, the Dow Jones Industrial Average dropped 0.3% to 34,393. Heading up losses in the Dow Jones Industrial Average, big banks Goldman Sachs and JPMorgan, which surged this year on expectations that the central bank will eventually raise interest rates, declined nearly 2% apiece.

During the last seven months, rising rates and accelerating economic growth triggered a rotation from growth stocks to cyclical and value-leaning slices of the market. Morgan Stanley analysts believe that inflation is the most proximate risk the current market has to deal with at the moment.

Stocks and the Federal Reserve

The coronavirus pandemic created huge pressure on countries all over the world. The Federal Reserve is working hard to boost the world’s largest economy. During the pandemic, the central bank has been buying more than $100 billion in assets each month. It also keeps the interest rates at historically low to support economic growth.

Thanks to the Federal Reserve the value of stocks, as well as other assets, reached meteoric highs. But as prices spiked and the country’s economy recovers, all eyes are on when the Fed will start to temper its policy.

Fed Chair Jerome Powell will discuss any changes to the policy on Wednesday afternoon. The one of central bank’s eight annual meetings will end on Wednesday. Many analysts do not expect Jerome Powell to hint at a change in policy this month due to the jobless rate. Many Americans are still looking for a job and employment is still stubbornly below pre-pandemic levels. Analysts expect Jerome Powell will change his tone in September. They expect Powell to announce a policy change in December. That means tech stocks could prolong their rally while inflation concerns linger.