NEW YORK, June 13 — The S&P 500 and Nasdaq indexes hovered near record highs today, lifted by a jump in chip stocks after lower-than-forecast producer inflation data fanned expectations of interest rate cuts from the Federal Reserve.

Nasdaq component Broadcom soared 14.3 per cent to hit a record high after the chipmaker raised its forecast for revenue from semiconductors used in artificial intelligence (AI) technology. It also announced a 10-for-1 forward stock split.

AI chip leader Nvidia rose 3.3 per cent, pushing the Philadelphia SE Semiconductor Index 1.5 per cent higher to an all-time peak.

A Labour Department report showed the US producer price index (PPI) unexpectedly fell 0.2 per cent month-on-month in May, compared with a 0.1 per cent increase expected by economists polled by Reuters.

Separately, the number of Americans filing new claims for unemployment benefits increased to a 10-month high last week.

Markets lifted bets on a September start to rate cuts to nearly 68 per cent from 60 per cent before the data, according to the CME’s FedWatch tool. That was despite policymakers projecting only one rate cut this year.

Investor sentiment was also supported by softer-than-expected US consumer inflation data on Wednesday and Fed Chairman Jerome Powell’s acknowledgement that progress had been made in tackling price pressures.

“PPI was a good number... it speaks to the Fed’s comments that inflation has shown signs of moderating, but they still need to see more signs of moderation in inflation,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

“But we’re moving in the right direction and it speaks to the potential for a rate cut of most likely in September.”

UBS Global Research said it now expects the Fed to cut interest rates in December instead of September, while Goldman Sachs and Morgan Stanley continue to expect the first cut in September.

Also on tap, New York Fed President John Williams will moderate a panel later in the day.

Benchmark Treasury yields extended losses from the previous session, helping lift stocks further.

At 9.46am ET, the Dow Jones Industrial Average was down 215.20 points, or 0.56 per cent, at 38,497.01, the S&P 500 was up 10.28 points, or 0.19 per cent, at 5,431.31, and the Nasdaq Composite was up 127.58 points, or 0.72 per cent, at 17,736.02.

The technology sector led sectoral gains with a 1.6 per cent rise, while the energy sector was among the biggest decliners.

Amid the optimism, questions remained over whether the economy was slowing too quickly, with the blue-chip Dow slipping and an index of economically sensitive small-cap stocks falling 0.4 per cent

Tesla leapt 5.9 per cent after Elon Musk said company shareholders were voting to approve his US$56 billion (RM263 billion) pay package and to move the electric-vehicle maker’s legal home to Texas.

Apple gained 1.5 per cent, trading at all-time-highs after overtaking Microsoft as the world’s most valuable company earlier in the week.

Virgin Galactic plunged 8.4 per cent, a day after announcing a 1-for-20 reverse stock split.

Declining issues outnumbered advancers for a 1.49-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.30-to-1 ratio on the Nasdaq.

The S&P index recorded 7 new 52-week highs and 5 new lows, while the Nasdaq recorded 29 new highs and 35 new lows. — Reuters