Tech Boom Propels S&P 500 and Nasdaq to Record Highs Amid Economic Data

The S&P 500 and Nasdaq closed at record highs, driven by tech stocks as economic data suggested a possible Federal Reserve rate cut. Weakening labor market data supported expectations for policy easing. Key performers included Nvidia, Taiwan Semiconductor, and Hewlett Packard Enterprise, while Dollar Tree faced a profit forecast drop.

The S&P 500 and Nasdaq indexes closed at record highs on Wednesday, powered mainly by technology stocks as markets digested economic data that could support a much-expected start to the Federal Reserve's policy easing cycle. The May private payrolls report on Wednesday became the latest data to suggest an easing in labor market tightness that could propel the Fed to begin cutting rates this year. A report on Tuesday showed job openings fell in April to the fewest in more than three years.

"We're seeing the economic data starting to ease up a little bit and the repercussions for that is that you're seeing the pressure on rates come off the boil a little bit mixed in with the potential for weaker economic data, which is a pretty good recipe for the bond market," said Jack Janasiewicz, a portfolio manager at Natixis Investment Managers Solutions in Boston. Traders now see a nearly 69% chance of a September rate reduction, according to the CME's FedWatch tool. Expectations had hovered around 50% last week.

U.S. 10-year Treasury yields fell to a two-month low on Wednesday after a report pointed to weaker-than-expected job growth ahead of Friday's highly anticipated government employment report for May. According to preliminary data, the S&P 500 gained 62.30 points, or 1.18%, to end at 5,353.64 points, while the Nasdaq Composite gained 329.34 points, or 1.95%, to 17,186.38. The Dow Jones Industrial Average rose 95.39 points, or 0.25%, to 38,806.68.

Chip stocks leapt, buoyed by gains to Nvidia and Taiwan Semiconductor Manufacturing, which both touched record highs. Hewlett Packard Enterprise rose after forecasting third-quarter revenue above Street expectations, helped by upbeat demand for its AI servers.

Dollar Tree slipped after a disappointing quarterly profit forecast. The budget retailer said it would explore options that include a potential sale or spinoff of Family Dollar. Intel gained after buyout firm Apollo Global Management agreed to purchase a 49% equity interest for $11 billion in a joint venture related to the chipmaker's Ireland manufacturing unit.

CrowdStrike Holdings jumped after forecasting second-quarter revenue above estimates when markets closed on Tuesday. The S&P 500's previous record-high close was 5,321.41 on May 21, and the Nasdaq's previous record close was 17,019.88 on May 28.