The S&P 500 and Nasdaq ended higher Thursday as an upbeat sales forecast from Cisco Systems helped lift the technology sector, while data showed the economy was relatively strong.
Investors were still assessing Wednesday's minutes from the Federal Reserve'sFederal Reserve's July meeting, which they initially saw as supporting a less aggressive stance by the central bank.
The minutes did not reveal the pace of rate increases and showed policymakers committed to raising rates to tame inflation.
Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey, said that the market is at a point where people are trying to make a judgement about whether or not the inevitable higher interest rates are going to choke off the upside of the market.
There are really two camps - one who feels the worst is behind us and continue to buy these selloffs, and the other that feels the worst is ahead of us and like this is a bear market rally that will retreat. In September, a 50 basis point increase in borrowing costs is predicted by traders, rather than a 75 basis point increase for a third time.
After a COVID 19 recovery in China eased supply chain shortages, Cisco gained and was among the biggest positives on the three major indexes, as it provided an upbeat forecast for first-quarter sales late on Wednesday.
The S&P 500 gained 10.42 points, or 0.24%, to end at 4,284, according to preliminary data. The Nasdaq Composite gained 27.85 points, or 0.22%, to 12,965. The Dow Jones Industrial Average rose 26.80 points, or 0.08%, to 34,007. The data Thursday showed solid momentum on the U.S. economic front, which supports the view that the Fed may need to be more hawkish.
The Philadelphia Federal Reserve'sFederal Reserve's monthly manufacturing index rose to 6.2 this month from negative 12.3 in July, topping all 30 estimates in a poll of Reuters economists.
A string of U.S. central bank officials said on Thursday that the Fed needs to keep raising borrowing costs to bring inflation under control, even though they debated how fast and how high it is to lift them.
The Fed has lifted its benchmark interest rate by 225 basis points this year in an effort to bring inflation down from a four-decade high.
Now, focus could be turned to the annual Jackson Hole symposium of the Fed later next week.
Nvidia was among the other gainers in high-growth stocks. Kohl's Corp stock fell after the retailer cut its full-year sales and profit forecasts. The news was followed by a dissapointing report from Target on Wednesday.
After a rough start to the year, stocks have jumped since mid-June because of upbeat earnings.
The market may be at a little bit of an equilibirum after the recent big move and with second-quarter earnings nearly done, Meckler said.