LIVE MARKETS-S&P 500, Nasdaq hit fresh record closing high for 2nd day

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S&P 500, NASDAQ HIT FRESH RECORD CLOSING HIGH FOR 2ND DAY

The S&P 500 index .SPX and the Nasdaq Composite .IXIC ended at record peaks for a second straight session on Wednesday, continuing to benefit from expectations of an upcoming interest rate cut by the Federal Reserve.

That said, weakness in some tech stocks is showing after the previous day's strong gains. Some large technology stocks including Nvidia NVDA.O, Alphabet GOOGL.O and Microsoft MSFT.O - among the so-called Magnificent Seven stocks - were lower as investors searched for new growth drivers.

"Valuations are elevated. I do think, though, at the end of the day, the key will be the delivery of earnings, and that's what we're seeing," said Katherine Bordlemay, co-head of client portfolio management, fundamental equities at Goldman Sachs Asset Management.

U.S. rate futures, meanwhile, are pricing in a 93% chance of a 25 basis-point (bp) easing next month and as much as a 7% probability of a 50-bp rate decline. The latter was just 3% earlier on Wednesday.

The slight pop in the 50-bp odds came after U.S. Treasury Secretary Scott Bessent pushed for such in interviews with Fox News on Tuesday and Bloomberg TV on Wednesday.

"We're cognizant that the pendulum of policy sentiment is currently swinging in favor of a more dramatic move by (Fed Chair Jerome) Powell at the September 17 meeting, even if we are unconvinced that the Committee will be willing to risk a repeat of 2024," writes BMO in a research note

"To be fair, a lot changed in the macro-outlook during 4Q 2024 that isn't expected to be echoed this year."

The market is now looking at Thursday's producer price index for confirmation that inflation remains subdued. Jobless claims are also on the radar as a potential market-moving event that could further contribute to the slowing U.S. economic picture.

Here is a closing snapshot of financial markets:

(Gertrude Chavez-Dreyfuss, Saeed Azhar)

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