Traders work on the floor of the New York Stock exchange during morning trading on May 17, 2024.
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The S&P 500 climbed to a fresh record Tuesday after Federal Reserve Chair Jerome Powell warned about the dangers of keeping interest high for too long.
The broad market index was last up 0.1%. The Nasdaq Composite added nearly 0.1%, after previously hitting a record earlier in the session. The Dow Jones Industrial Average ticked down 62 points, or 0.2%.
Powell said that keeping interest rates elevated for too long could risk further economic growth, seemingly hinting that the central bank is considering taking a less restrictive stance.
“Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell said as part of his semiannual update on monetary policy. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
Powell will continue testimony this week before Congress on Wednesday before the House Financial Services Committee. His remarks come ahead of key inflation data due out later this week, with the June consumer price index on Thursday and the producer price index on Friday.
“The labor market has been weakening and Powell is starting to pay attention,” said David Russell, global head of market strategy at TradeStation. “He recognizes that policy is restrictive and progress has been made on inflation. This potentially lays the groundwork for a ‘Powell put’ later in the year.”
Nvidia shares were up about 2.2% after KeyBanc hiked its price target on the chipmaker to $180, implying upside of 40% from Monday’s close.
A lack of market breadth kept the S&P 500’s gains in check, however. Shares of McDonald’s and Microsoft slipped 1% and 1.6%, respectively.
“The S&P 500 has been driven by a narrow range of tech leaders leveraged to AI tailwinds, while the rest of the market has significantly lagged,” Pernas Research co-founder Deiya Pernas said of the S&P 500’s fresh record high. “Given the exuberance around AI, we expect this trend to continue in the near to intermediate term.”
— CNBC’s Jeff Cox contributed to this report.
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