S&P 500 adds to its record as Wall Street drifts higher

The American flags hangs on the facade of the New York Stock Exchange in New York's Financial District on Tuesday, Nov. 5, 2024. (AP Photo/Peter Morgan, File)

NEW YORK — The S&P 500 added to its record as U.S. stock indexes drifted through a quiet Wednesday on Wall Street.

The S&P 500 rose 0.2% after setting an all-time high the day before. The Dow Jones Industrial Average picked up 71 points, or 0.2%, while the Nasdaq composite inched up by 0.1%.

Microsoft was the strongest force pushing the S&P 500 upward. It rose 1.3% after saying it had developed what it calls the world’s first “quantum processing unit,” which could lead to the development of much more powerful computers. While the gain was relatively modest, Microsoft’s gargantuan size gives its stock’s movements huge sway on the S&P 500 and other indexes.

A 9.7% rally for Analog Devices also helped push the market higher. The semiconductor company reported stronger profit for the latest quarter than analysts expected, despite what CEO Vincent Roche called a “challenging macro and geopolitical backdrop.”

Elon Musk’s Tesla rose 1.8%. It climbed after another electric-vehicle company, Nikola, plunged 39.1% following its filing for Chapter 11 bankruptcy protection. The electric truck maker said it will try to sell off its assets and wind down its business.

They helped offset a 21.5% tumble for Celanese, which dropped even though the chemical company reported profit for the end of 2024 that topped analysts' expectations. CEO Scott Richardson warned that it saw “demand deterioration that gave no sign of easing” during the last three months of the year, and the company expects weakness to continue for such core markets as automotive, construction and paints.

Toll Brothers, meanwhile, fell 5.9% after the homebuilder reported a weaker profit for the latest quarter than analysts expected. CEO Douglas Yearley Jr. said this spring selling season has seen healthy demand so far for homes at the higher end of the price spectrum, but “affordability constraints” are hurting sales at the lower end.

A separate report on Wednesday morning said homebuilders as a group broke ground on fewer U.S. houses last month than economists expected.

High mortgage rates are making it difficult for some potential homebuyers to afford a house, even though the Federal Reserve began cutting its main interest rate in September in order to make things easier for the economy.

Mortgage rates have followed the trend of longer-term Treasury yields, which have remained relatively high in part because the U.S. economy has remained remarkably solid and because inflation hasn’t eased as much as hoped. Tariffs threatened by President Donald Trump, along with other policies that could put upward pressure on inflation, have also caused some sharp swings for yields in the bond market.

The yield on the 10-year Treasury eased a bit Wednesday and edged down to 4.53% from 4.55% late Tuesday. It was below 3.70% as recently as September and approaching 4.80% within the past few weeks.

Both the bond and the stock markets have increasingly been taking Trump’s tariffs in stride, after earlier showing much more trepidation. The hope on Wall Street is that Trump is using such threats merely as a tool to drive negotiations, and the ultimate effects won’t be as bad as they initially appeared.

All told, the S&P 500 added 14.57 points to finish at 6,144.15. The Dow Jones Industrial Average rose 71.25 to 44,627.59, and the Nasdaq composite gained 14.99 to 20,056.25.

Such calm responses, though, could of course make things worse if conditions don’t go as Wall Street expects, or if it emboldens Trump to make even more forceful actions.

For its part, the Federal Reserve has already signaled it may make fewer cuts this year than earlier expected, in part because of worries that inflation will remain stubbornly above its 2% target. Cutting rates can boost the economy and juice prices for investments, but they can also give inflation more fuel.

Minutes released Wednesday for the Fed’s last policy meeting in January showed officials discussed how Trump’s proposed tariffs and mass deportations of migrants, as well as strong consumer spending, could push inflation higher this year

In stock markets abroad, London’s FTSE 100 fell 0.6% after a report showed U.K. inflation accelerated to a 10-month high. That could put pressure on the Bank of England, which had been cutting interest rates to invigorate its tepid economy.

Indexes fell more than 1% in other European markets, including in France and Germany, after finishing mixed across Asia. South Korea’s Kospi jumped 1.7%, while Japan’s Nikkei 225 slipped 0.3%.

AP Business Writers Matt Ott and Zen Soo contributed