Wall Street Traders Send Stocks to All-Time Highs Amid Falling Bond Yields

Wall Street traders are celebrating as stocks hit all-time highs while bond yields fall. The surge in the market comes as traders anticipate potential Federal Reserve rate cuts following comments from Jerome Powell indicating a disinflationary path for the US economy.

The S&P 500 closed above 5,500 for the first time in history, extending a remarkable rally in 2024 that has left analysts scrambling to update their targets. Tesla Inc. led gains in megacaps with a 10% surge, while the Nasdaq 100 also hit a record high, reaching the 20,000 mark.

The record-setting surge in US equities, driven primarily by American technology giants, has some drawing comparisons to past boom-and-bust cycles on Wall Street. However, experts note that the current rally, while impressive, does not match the magnitude of major bull runs seen in the past.

Despite concerns about the market being ahead of itself, analysts like Lori Calvasina at RBC Capital Markets remain optimistic about the S&P 500’s future performance. Calvasina raised her year-end target to 5,700, one of the highest on Wall Street, citing strong economic fundamentals and solid corporate earnings.

Deutsche Bank AG strategists expect US earnings to rise by 13% for the second quarter, driven by growth in megacap and tech stocks. The outlook for a sixth straight quarter of above-average beats has bolstered investor confidence in the market’s sustainability.

While Powell’s recent comments did not explicitly signal rate cuts, they were seen as supportive of potential cuts in September. Wall Street is now eagerly awaiting a slew of economic data, including the all-important US payrolls report due Friday, which economists expect to show a positive trend in job growth.

Overall, the market remains optimistic about the future, with traders betting on continued economic strength and potential Fed easing. The resilience of US equities in the face of market risks and global uncertainties has fueled the ongoing rally, leaving investors bullish on the outlook for the rest of the year.