Tech stocks are listed on the Nasdaq.
Peter Kramer | CNBC
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What you need to know today
US inflation is in line with expectations
U.S. inflation accelerated in November, rising to 2.7% year-on-year from 2.6% in October, while core inflation – which excludes food and energy prices – remained unchanged at 3.3%. Both key figures corresponded to forecasts. Although the inflation rate was higher, the majority of traders still expect the Fed to cut its key interest rate later this month, with the CME's FedWatch tool reporting a 95% probability.
Nasdaq hits new high
Alphabet and Tesla climbed to new highs on Wednesday, joining Amazon and Meta in pushing the Nasdaq above 20,000 points for the first time. The four tech giants increased their market capitalization by around $416 billion that day. The Nasdaq Composite rose 1.77% to close at 20,034.89. The S&P 500 gained 0.82%, but the Dow Jones Industrial Average fell 0.22%.
ETFs top $1 trillion in inflows
The exchange-traded fund industry has surpassed $1 trillion in total inflows for the first time ever, according to research firm ETFGI and the Investment Company Institute. The fund that has seen the most demand so far this year is the Vanguard S&P 500 ETF (VOO), which raised around $100 billion. US ETFs now have assets worth more than $10 trillion. The previous record for US ETF inflows was around $920 billion in 2021.
OPEC lowers demand forecast again
According to Reuters, OPEC has cut its growth forecast for global oil demand in 2024 for the fifth consecutive month and by the largest amount to date. OPEC expects global oil demand to rise by 1.61 million barrels per day, down from its previous forecast of 1.82 million barrels per day last month. Additionally, the 2025 growth estimate was lowered to 1.45 million bpd from 1.54 million bpd. Part of the recent downgrade was due to China, as Chinese oil demand is expected to rise by 430,000 bpd in 2024, compared to a 760,000 bpd increase forecast in July.
[PRO] Alphabet's quantum leap
The Nasdaq Composite surpassed the psychologically important 20,000 point mark for the first time ever on Wednesday, thanks in part to Alphabet's breakthrough in quantum computing. Wall Street analysts believe the stock can continue to rise.
The end result
Tech investors rejoiced on Wednesday as four of the seven megacap tech stocks closed at all-time highs, with Amazon, Meta, Tesla and Alphabet adding around $416 billion in market capitalization on the day.
The gains in technology come as inflation numbers in November were in line with expectations. The reading clears the way for the Fed to cut interest rates, which is likely to push tech stocks higher.
However, the enthusiasm could be short-lived given US President-elect Donald Trump's plans to increase tariffs, which are likely to have an inflationary effect.
If inflation remains stubborn, the Fed will have to halt its easing cycle, removing one of the key drivers of the tech rally.
Tesla, whose stock is up about 71% this year, may be the outlier, with most of its gains stemming from Trump's election victory last month.
Tesla CEO Elon Musk has a close relationship with the president-elect, having contributed to Trump's campaign and will head the Trump administration's Government Efficiency Department alongside former Republican presidential candidate Vivek Ramaswamy.
His new role could give Musk power over federal agencies' budgets and staffing levels and the ability to push for the elimination of inconvenient regulations.
“The stock is reacting to the Trump boom,” Roth MKM analyst Craig Irwin told CNBC's “Squawk on the Street” last week. Irwin raised his price target to $380 from $85, noting in a report that “Musk's authentic support for Trump likely doubled Tesla's enthusiast base and increased credibility for a demand turnaround.”
On Wednesday, analysts at Goldman Sachs raised their price target on Tesla, echoing bullish reports from companies including Morgan Stanley and Bank of America.
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