The S&P 500 and Dow Jones Surged to New Highs, Fueled by “Magnificant 7” Stocks

The US Stock market rallied for a second consecutive day on Wednesday, with the S&P 500 reaching new heights, up by 41.9 points, or 0.70%. Meanwhile, the Dow Jones Industrial Average experienced a significant surge, jumping 430 points, a 1% increase. Tech giants like Microsoft (MSFT), Amazon (AMZN), and Apple (AAPL) each surged by 1%, with Super Micro Computer (SMCI)most impressively soaring by 7%. This tech-driven rally helped overcome the rocky start to October, propelling the major indexes into positive figures for the month.

Overall, the market rally started with the Federal Reserve’s September meeting, where a “substantial majority” of participants favored a significant rate cut of half a percentage point. This decision provided a substantial push to investor confidence, overshadowing ongoing geopolitical tensions and a disappointing trading session in China, where profit-taking led to significant declines.

Despite concerns over a potential broader conflict in the Middle East and regulatory pressures on companies like Alphabet, which faced a 2% drop after news of a possible DOJ breakup, Wall Street managed to close strong. This resilience is partly attributed to easing oil prices and sustained labor market strength, suggesting that the Fed might successfully manage a soft economic landing.

Looking forward, the market anticipates the latest consumer and producer price index readings, while earnings season is set to commence with updates from major banks like JPMorgan Chase and Wells Fargo. This confluence of factors contributes to a cautiously optimistic outlook, although volatility is expected as the U.S. presidential election nears.

This article first appeared on GuruFocus.