The S&P 500 and Nasdaq Composite closed at record highs for a third consecutive day, even as the Federal Reserve signaled just one interest rate cut this year.
The Dow Jones Industrial Average slipped 35 points, or 0.1 percent, while the S&P 500 gained 0.9 percent and the Nasdaq surged 1.5 percent.
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Investors reacted to the May Consumer Price Index report, which showed inflation cooling to 3.3 percent year-over-year, down from 3.4 percent in April.
On a monthly basis, prices were unchanged.
The Federal Reserve held its benchmark lending rate steady at a 23-year high of 5.25-5.5 percent for the seventh straight meeting.
However, central bank officials revised their projections, now expecting only one rate cut in 2024, down from three cuts forecast in March.
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Fed Chair Comments on Inflation Progress
Federal Reserve Chair Jerome Powell said the central bank will not lower rates until data confirms a sustainable trend toward the 2 percent target.
"Certainly, more good inflation readings will help with that," Powell stated during a press conference.
Powell described the latest inflation data as encouraging but emphasized that decisions will depend on the totality of economic indicators.
He also noted that a broad set of data suggests the labor market has returned to its pre-pandemic balance without overheating.
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New economic projections show Fed officials expect the Personal Consumption Expenditures inflation rate to be 2.6 percent this year, higher than the 2.4 percent previously estimated.
