NEW YORK, June 30 — US stocks rallied today, setting up Wall Street for a strong second quarter, as Apple shares hit a record high and signs of easing inflation offered relief to investors worried about further interest rate hikes.

Apple Inc rose 1.6 per cent to hit an all-time high at US$192.74 (RM900) and notched the US$3 trillion market valuation mark for the first time since January 2022.

Helped by gains in Apple, technology stocks rose 1.6 per cent and led advance among the 11 major S&P 500 sectors.

A Commerce Department report showed the Personal Consumption Expenditure index (PCE), the Fed’s preferred inflation gauge, advanced 3.8 per cent, compared with a 4.3 per cent rise in April. Excluding the volatile food and energy components, the PCE price index gained 0.3 per cent, down from 0.4 per cent in the previous month.

"It is showing hints of stability and that we’re headed in the right direction,” said Peter Andersen, founder of Andersen Capital Management in Boston.

"As we close out this quarter and turn to the second half, I’m optimistic that the economy and the consumer are in good shape and will continue to recover.”

Traders were pricing in an 85.6 per cent chance that the Fed will hike rates by 25 basis points to 5.25 per cent-5.50 per cent range in its July meeting, according to CMEGroup’s Fedwatch tool, down slightly from the 89.3 per cent yesterday.

At 9.58am ET (9.58pm Malaysian time), the Dow Jones Industrial Average was up 226.61 points, or 0.66 per cent, at 34,349.03, the S&P 500 was up 45.09 points, or 1.03 per cent, at 4,441.53, and the Nasdaq Composite was up 184.54 points, or 1.36 per cent, at 13,775.87.

Hawkish remarks from Fed Chair Jerome Powell and strong economic data this week boosted bets that the US central bank will continue to raise interest rates, but stock markets were buoyant on signs of strength in the US economy.

Despite a recent streak of losses, the three main US indexes were on course to end June and the second quarter on a high note as investors expect the Fed’s aggressive tightening will not derail the US economy.

Meanwhile, artificial intelligence (AI)-inspired frenzy in technology and megacap stocks set the tech-heavy Nasdaq for a near 30 per cent gain in the first half — in what could be its best such performance in 40 years.

Treasury yields came under pressure after the data, with the yield on two-year notes, most reflective of short-term rate expectations, trading below March highs at 4.89 per cent, while benchmark 10-year yield slipped to 3.84 per cent.

The CBOE Market Volatility Index, Wall Street’s fear gauge, slipped to a one-week low at 13.48 points.

Nike Inc fell 2.1 per cent after it forecast first-quarter revenue below Wall Street expectations.

Carnival Corp jumped 7.7 per cent after Jefferies upgraded the cruise operator’s stock to "buy” from "hold”.

Advancing issues outnumbered decliners by a 4.99-to-1 ratio on the NYSE and 2.47-to-1 ratio on the Nasdaq.

The S&P index recorded 67 new 52-week highs and no new lows, while the Nasdaq recorded 76 new highs and 24 new lows. — Reuters