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U.S. Stocks Close Higher with Dow Leading, S&P 500 Sets New Record

U.S. stocks concluded the session on a positive note, with the Dow leading gains and the S&P 500 reaching a new closing record. The surge was fueled by drugmaker Merck, while investors eagerly awaited insights on the rate trajectory from upcoming inflation data and Federal Reserve commentary.

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Merck & Co saw a notable advancement of 4.96%, emerging as the top performer on the Dow, following the approval of its therapy by the U.S. Food and Drug Administration for adults afflicted with a rare lung condition.

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The Dow, representing blue-chip stocks, now stands within striking distance of the historic 40,000 level, marking a significant milestone.

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Despite the overall market uptrend, gains on the tech-focused Nasdaq were tempered by a 2.5% decline in AI giant Nvidia (NASDAQ:NVDA), which faced losses for the second consecutive session. Nevertheless, Nvidia shares maintained a remarkable year-to-date increase of over 80%.

While recent inflation data, including consumer prices (CPI) and producer prices (PPI), surpassed expectations, they failed to significantly alter market forecasts for a minimum 25-basis-point rate cut by the Federal Reserve in June.

During its recent policy meeting, the Fed upheld projections for three rate cuts this year, a stance reiterated by central bank officials this week through their comments.

The upcoming release of the Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred inflation metric, on Good Friday, coinciding with a U.S. stock market closure, is awaited for further insights.

The Fed can and should take its time, largely because the economy is affording them that flexibility with the strength that we’re seeing, and that premature rate cuts only probably set us up for a more adverse outcome,” noted Craig Fehr, head of investment strategy at Edward Jones in St. Louis.

Fed Board Governor Christopher Waller is scheduled to address the Economic Club of New York later in the day.

The Dow Jones Industrial Average surged by 477.75 points, or 1.22%, to 39,760.08, while the S&P 500 advanced by 44.91 points, or 0.86%, to 5,248.49, setting a new record. The Nasdaq Composite registered an increase of 83.82 points, or 0.51%, reaching 16,399.52.

These gains marked the most significant daily percentage rise for the Dow since December 13.

All eleven major S&P sectors recorded gains, with utilities and real estate, sensitive to interest rates, leading the charge with increases of 2.75% and 2.42%, respectively, buoyed by easing bond yields.

In individual stocks, Trump Media & Technology Group surged by 14.19% following its impressive Nasdaq debut, while GameStop (NYSE:GME) plummeted by 15.03% after reporting lower fourth-quarter revenue and announcing job cuts to trim costs.

Advancing issues outnumbered decliners by a ratio of 4.5-to-1 on the NYSE and 2.68-to-1 on the Nasdaq.

The S&P 500 recorded 62 new 52-week highs with no new lows, while the Nasdaq notched 184 new highs alongside 79 new lows.

Trading volume on U.S. exchanges amounted to 10.65 billion shares, slightly below the 12.2 billion average for the past 20 trading days, with activity expected to taper ahead of the Friday holiday.

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