US stocks popped to fresh records Wednesday as investors digested a one-two punch: a cooler-than-expected reading on inflation, and the Federal Reserve holding interest rates steady but slashing projections for cuts this year.
The S&P 500 (^GSPC) notched a record close for the 28th time this year, rising about 0.9% and closing above 5,400. The tech-heavy Nasdaq Composite (^IXIC) rose about 1.5%, also adding to a record close from the prior day. The Dow Jones Industrial Average (^DJI) gave up 0.1%.
The Consumer Price Index (CPI) remained flat over the previous month and rose 3.3% over the prior year in May — a deceleration from April's 0.3% month-over-month increase and 3.4% annual gain in prices. Both measures beat economist expectations. On a "core" basis, which strips out the more volatile costs of food and gas, prices in May climbed 0.2% over the prior month and 3.4% over last year — cooler than April's data. Both measures also came in better than economist estimates.
Later in the day, the Fed held rates steady at multi-decade highs and projected just one rate cut this year — down from three in March. Policymakers also projected core inflation would end the year at 2.8%, also an increase from March. However, Chair Jerome Powell said the Fed "welcome[d]" Wednesday's inflation progress while noting it would need to see similar future prints to remain confident in inflation's progress.
