The S&P 500 rose on Tuesday, buoyed by gains in major companies like Nvidia and Eli Lilly. This increase came in the wake of US President Donald Trump announcing the dismissal of Federal Reserve Governor Lisa Cook, raising concerns about the central bank’s independence from political influences.
Nvidia, which is set to release its quarterly report late on Wednesday, saw its stock increase by 1.1 percent. Investors are closely watching the report to gauge how the chipmaker is navigating the complexities of the ongoing trade tensions between Washington and Beijing. The company’s results could significantly impact the performance of AI-related stocks on Wall Street.
Trump’s decision to remove Cook stemmed from allegations regarding improprieties in obtaining mortgage loans. This action has heightened worries about the Federal Reserve’s autonomy and its ability to operate free from political pressure. As a result, S&P 500 futures fell briefly before the market rebounded, as investors remained optimistic that the central bank would proceed with planned interest rate cuts in September.
Bill Merz, head of Capital Market Research at US Bank Wealth Management, noted, “The financial market community is increasingly concerned about that independence. That is a real concern over the long run. But over the short run… I think the writing has already been on the wall that we get easier monetary policy in the next six to 12 months.”
Despite persistent inflationary pressures, traders are pricing in a 25-basis-point interest rate cut at the Fed’s upcoming policy meeting. This sentiment is bolstered by dovish comments from Fed Chair Jerome Powell and indicators of weakness in the labor market. Morgan Stanley also joined other brokerages in predicting an interest rate cut, although forthcoming inflation and job reports could lead to a reassessment of these expectations.
Eli Lilly’s stock surged nearly 6.0 percent after the company announced positive results for its experimental pill, which reportedly reduces body weight by 10.5 percent in diabetes patients. This news added to the overall positive momentum in the market.
The S&P 500 closed up 0.41 percent, finishing the day at 6,465.94 points, just shy of its record high from August 14. The Nasdaq Composite increased by 0.44 percent, reaching 21,544.27 points, while the Dow Jones Industrial Average rose by 0.30 percent to end at 45,418.07 points.
Seven of the eleven S&P 500 sector indices recorded gains, with industrials leading the way with a 1.03 percent increase, followed closely by financials, which rose by 0.76 percent. Advanced Micro Devices experienced a 2.0 percent uptick after Truist Securities upgraded the chip stock from “hold” to “buy.”
A significant highlight of the day was EchoStar, whose stock surged 70 percent to a record high after AT&T announced it would acquire certain wireless spectrum licenses from the satellite communications firm for approximately $23 billion (about $35 billion AUD).
Overall, advancing issues outnumbered declining ones within the S&P 500 by a ratio of 1.1-to-one. The index recorded 21 new highs and 2 new lows, while the Nasdaq saw 120 new highs and 59 new lows. Trading volume on US exchanges was relatively light, with 15.7 billion shares exchanged, compared to an average of 16.9 billion shares over the preceding 20 sessions.
