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Wall Street Twirls to Record Highs on Inflation Whispers and Rate Cut Hopes

In the financial theater of dreams, U.S. stock index futures took center stage in the evening performance on Wednesday, choreographing a graceful rise. This encore came after whispers of a slight dip in consumer inflation whispered sweet nothings into Wall Street’s ear, prompting it to pirouette to record highs in anticipation of interest rate cuts.

As the curtains rose, Wall Street’s ensemble rallied, while the dollar and Treasury yields took a graceful dip. Why? Well, it seems the consumer price index data decided to flaunt a softer side, convincing traders that the Federal Reserve might start snipping rates come September.

This bullish mood waltzed into after-hours trading, with S&P 500 Futures leading the dance, stepping up 0.1% to 5,338.75 points. Nasdaq 100 Futures joined the ball, twirling 0.2% higher to 18,724.50 points, while Dow Jones Futures gracefully rose 0.1% to 40,092.0 points, all by 20:17 ET (00:17 GMT).

In the spotlight, CPI inflation showed off its softer side in April, but let’s not forget, it’s still the diva well above the Fed’s 2% annual target. And let’s not ignore its backstage buddy, the producer price index, who strutted out with a stronger-than-expected performance just the day before.

Yet, despite these theatrics, investors were buzzing about a potential 25 basis point rate cut in September, now fluttering at a 53.8% probability according to the CME Fedwatch tool, up from the 49.0% chance just last week.

And the drama didn’t stop there! Weak retail sales data for April swooped in, adding fuel to the flames of hope that inflation might just take a chill pill in the upcoming acts.

As the final curtain fell, the S&P 500 took a bow, rising 1.2% to 5,308.15 points, while the NASDAQ Composite followed suit, leaping 1.4% to 16,742.39 points. The Dow Jones Industrial Average gracefully ascended 0.9% to 39,908.0 points, sending all three benchmarks off to the after-party at record highs.

But every performance has its hiccups. The two-day rally in the so-called meme stocks stumbled on Wednesday, with GameStop Corp and AMC Entertainment Holdings Inc both tripping over their own feet and sliding around 20% during the session. And guess what? Their woes continued even after the curtains closed, with both seeing extended losses in aftermarket trade.

As the orchestra played on, Chubb Ltd took a solo, soaring over 7% to hit a record high in after-hours trade, all thanks to a cameo from Warren Buffett’s Berkshire Hathaway Inc, which revealed it had taken a $6.72 billion stake in the company.

And last but not least, Cisco Systems Inc stole a scene, rising nearly 5% after the communications equipment maker delivered a performance of stronger-than-expected quarterly earnings.

Warren Buffett Sends Chubb Shares Skyrocketing with $6.72 Billion Stake

In a move that made wallets everywhere applaud, Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRKa) pulled back the curtain on Wednesday to reveal its latest masterpiece: a whopping $6.72 billion stake in Chubb Ltd (NYSE:CB). As the news hit the wires, Chubb’s shares sky-rocketed like they had just won the jackpot in a game of financial roulette, soaring 7.5% after hours to a dazzling record high of $271.84.

Berkshire, playing the role of the financial puppet master, disclosed in a filing that it owned a staggering 25.9 million shares in the insurer as of March 31, a fact that sent shockwaves through the market like a well-timed plot twist in a blockbuster movie. But this wasn’t Berkshire’s first rodeo; they had been stealthily accumulating Chubb shares since the third quarter of 2023, sneaking under the radar with the blessing of the Securities and Exchange Commission, much like a cat burglar tiptoeing through a museum after hours.

And it wasn’t just Chubb that Berkshire had its eyes on; they had also been making moves on Chevron Corp (NYSE:CVX), Exxon Mobil Corp (NYSE:XOM), International Business Machines (NYSE:IBM), and Verizon Communications Inc (NYSE:VZ), proving once again that when it comes to the stock market, Berkshire plays chess while others are still figuring out checkers. As if that weren’t enough excitement for one day, Chubb decided to add some icing to the cake by clocking in some seriously impressive earnings for the first quarter of 2024, with gross premiums hitting a jaw-dropping $14 billion and net income soaring to $5.23 from $4.54 the previous year.

And just when you thought the plot couldn’t thicken any further, Berkshire dropped another bombshell by disclosing that it had sold about 15 million shares in Apple Inc (NASDAQ:AAPL) in the first quarter, a move that raised eyebrows but didn’t dampen Berkshire’s affection for the tech giant, which still remained its biggest holding by a country mile, valued at a staggering $135.4 billion. With Berkshire’s financial antics turning the stock market into a real-life soap opera, one thing’s for sure: Thursdays just got a whole lot more interesting.