US stocks rise, small caps hit record high as Fed decision looms
US stocks rose by midday Wednesday, led by small caps which hit a record high, as investors awaited the Federal Reserve's interest rate decision. The Russell 2000 jumped 1.2%, while the S&P 500 and Dow Jones posted modest gains. Semiconductor stocks rallied, while exchange operators declined on competitive concerns.
*this image is generated using AI for illustrative purposes only.
US stocks traded higher by midday Wednesday, with small caps leading the major benchmarks to a record high as investors awaited the Federal Reserve's interest rate decision. The Russell 2000 jumped 1.2% to 2,975, reaching a record level, while the S&P 500 added 0.1% to 7,515. The Dow Jones Industrial Average rose 0.3% to 52,171, building on Tuesday's record close, and the Nasdaq 100 gained 0.4% to 30,077.
The Federal Reserve, led by Chair Kevin Warsh, is widely expected to hold the funds rate at 3.50%-3.75%. Market focus remains on the updated "dot plot" for any signals of a hawkish tilt and Warsh's commentary on inflation and the future path of interest rates.
Market Performance
| Index | Last | % Change |
|---|---|---|
| S&P 500 | 7,515.44 | +0.1% |
| Dow Jones | 52,170.95 | +0.3% |
| Nasdaq 100 | 30,077.35 | +0.4% |
| Russell 2000 | 2,975.00 | +1.2% |
Sector performance was mixed, with technology and industrials leading gains. The Technology Select Sector SPDR Fund (NYSE: XLK) rose 1.4%, driven by a rally in semiconductor stocks. The Industrials Select Sector SPDR Fund (NYSE: XLI) added 1.3%. Conversely, the communications sector lagged, falling 1.8%, while consumer staples and real estate also trailed.
Notable Movers
Applied Materials Inc. (NASDAQ: AMAT) surged 7% after Citi raised its price target to $710 from $550, citing durable AI-driven demand for wafer-fab equipment. Fermi Inc. (NASDAQ: FRMI) topped the large-cap gainers, jumping 13.3% on reports that SpaceX rival OpenAI is evaluating capacity at its Project Matador AI power campus. Robinhood Markets Inc. (NASDAQ: HOOD) gained 12.2% after Deutsche Bank lifted its price target to $105 from $98, citing record trading volumes and workforce reductions.
On the downside, exchange operators declined following concerns over competition from Kalshi's approval to offer Bitcoin perpetual futures. Cboe Global Markets Inc. (BATS: CBOE) dropped 5.8%, CME Group Inc. (NASDAQ: CME) fell 4.4%, and Nasdaq Inc. (NASDAQ: NDAQ) lost 4.0%. Auto retailers also slumped, with CarMax Inc. (NYSE: KMX) falling 7.0% despite an earnings beat, dragging peer Carvana Co. (NYSE: CVNA) down 7.6%.
In commodities, West Texas Intermediate crude climbed 1.0% to $76.79 a barrel, and Brent rose 0.8% to $79.60. Gold firmed, with spot bullion near $4,365 an ounce, up 0.8%.
How might a hawkish shift in the updated dot plot impact the recent rally in small-cap stocks?
Will the surge in semiconductor stocks driven by AI demand sustain if the Fed signals a slower pace of rate cuts?
How will exchange operators adapt their strategies to counter the competitive threat posed by Kalshi's Bitcoin futures approval?
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