Stock ETFs Hit Fresh Records as Inflation Jitters Ease

Investors betting on rate cuts feverishly bought stocks, pushing broad equity ETFs to fresh records and lifting stock markets around the world.

The etf.com markets monitor was a field of green, as U.S., Europe, Latin American and Asian markets jumped. Of the approximately 41 geographic sectors tracked in the monitor, only 6 declined, including China and India.

The gains occurred as Federal Reserve Chair Jerome Powell offered comments to the House Financial Services Committee earlier today that gave investors a sense that if labor and inflation trends continue, interest rates may be cut in as little as two months. 

The Vanguard S&P 500 ETF (VOO) closed at a record $515.86 after jumping 1%, tracking the S&P 500. Bonds also largely moved higher, with the iShares 20+ Year Treasury Bond ETF (TLT) adding 0.3%.

In the red today were cryptocurrency exchange-traded funds, with the Blackrock Bitcoin Trust (IBIT) losing 0.8%.

Global equity markets are embracing the latest signal from Federal Reserve Chairman Jerome Powell that interest rates cuts are still on the table following reports of a cooling employment market.

In midday trading Wednesday, the Heng Seng Market tracking companies in Hong Kong and mainland China stood out as the only major stock market index in negative territory.

In the ETF space, leveraged bets on uranium led the way during the first half of the day with the Defiance Daily Target 2X Long Uranium ETF (URAX) up almost 10% and the Sprott Junior Uranium Miners ETF (URNJ) up more than 7%.

Broad market ETFs climbed to record highs as Powell continued his congressional testimony. Speaking to the House Financial Services Committee.

SPY, the SPDR S&P 500 ETF Trust added to earlier gains, rising 0.7% in early afternoon trading. QQQ, the Invesco QQQ Trust, which tracks the tech-heavy Nasdaq, added almost 1% and crossed over $500.

Broad market ETFs climbed to record highs Wednesday while Fed Chair Jerome Powell continued his congressional testimony. Speaking to the House Financial Services Committee, he is set to address questions on the economy, inflation, and the future path of rate cuts.

SPY, the SPDR S&P 500 ETF Trust rose 0.4% to $557.81 shortly before noon. QQQ, the Invesco QQQ Trust, which tracks the tech-heavy Nasdaq, also inched up to just shy of $500.

Both ETFs notched record highs as Powell's testimony continued to fuel hopes of a September rate cut, which would help boost markets. While DIA, the SPDR Dow Jones Industrial Average ETF Trust also rose Wednesday, the fund is still off from its record high it set in May.

While Powell declined to give an exact timing on the future path of rate cuts, the Chair did warn Congress that cutting rates too soon could "stall or even reverse the progress" the country has made on inflation.

According to the CME Fed Watch Tool, markets are projecting a 72% chance that the Fed will cut rates by 25 basis points at the September policy meeting.