By Noel Randewich and Ankika Biswas

NEW YORK (Reuters) -The Nasdaq and S&P 500 hit record highs on Wednesday fueled by gains in Nvidia (NASDAQ:NVDA) and other Wall Street heavyweights ahead of inflation data and quarterly earnings reports due this week.

It was the fifth straight day of intraday record highs for the S&P 500 and the Nasdaq. The S&P 500 crossed 5,600 for the first time as expectations of an interest-rate cut in September climbed following comments this week by Federal Reserve Chair Jerome Powell.

Powell said in his second day of Congressional testimony that he was not ready to conclude that inflation was moving sustainably down to 2%, although he expressed "some confidence of that".

The Philadelphia semiconductor index jumped 2% to a record high after contract manufacturer Taiwan Semiconductor Manufacturing Co posted strong quarterly revenue.

"TSMC's report supported the AI narrative, so that more than anything else today is a pretty important data point," said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta.

Micron Technology (NASDAQ:MU) rallied almost 4%, while Nvidia rose 2.3% to a three-week high.

Apple (NASDAQ:AAPL) climbed 1.4% to a record high, lifting its stock market value to almost $3.6 trillion.

Of the 11 S&P 500 sector indexes, 10 rose, led by information technology, up 1.24%, followed by a 0.97% gain in materials.

With just a handful of large-cap stocks fueling Wall Street's rally this year, some investors worry about a potential selloff if those companies' earnings fail to meet high expectations.

The S&P 500 was up 0.69% at 5,615.50 points.

The Nasdaq gained 0.99% to 18,610.88 points, while the Dow Jones Industrial Average was up 0.48% at 39,482.11 points.

U.S. inflation data due this week include the Consumer Price Index on Thursday and the Producer Price Index report on Friday.

Expectations of a 25-basis-point rate cut by September ticked up to 74% from around 70% on Tuesday and 45% a month ago, according to CME's FedWatch.

Second-quarter earnings season, which kicks off this week with major banks reporting on Friday, will test whether high-flying megacaps can justify expensive valuations and extend their strong runs.

Intuit (NASDAQ:INTU) dropped 3% after the TurboTax owner said it plans to lay off about 10% of its workforce.

Gene-sequencing equipment maker Illumina (NASDAQ:ILMN) jumped 6.5% on plans to acquire privately held Fluent (NASDAQ:FLNT) BioSciences.

Advancing issues outnumbered falling ones within the S&P 500 by a 2.3-to-one ratio.

The S&P 500 posted 27 new highs and 10 new lows; the Nasdaq recorded 54 new highs and 104 new lows.

By Shivangi Acharya and Swati Bhat

NEW DELHI/MUMBAI (Reuters) - India's growing employment stems largely from self-employed individuals, unpaid workers and temporary farm hires, whose jobs are not equivalent to formal positions with regular wages, private sector economists said on Wednesday.

The comments follow labour department figures released this week showing 20 million new employment opportunities generated each year since 2017/18, countering a Citibank report that said only 8.8 million jobs were added each year since 2012.

"What is clear is that there is a large increase coming from agriculture and from self-employment, which includes own account work or unpaid family work," said Amit Basole, head of the Centre for Sustainable Employment at the Azim Premji University.

The jump in employment cannot be equated to the creation of formal jobs with regular wages, Basole said, going by detailed data available up to the financial year 2022/23.

In the fiscal year that ended in March 2024, employment in the economy rose by 46.7 million for a total of 643.3 million, up from 596.7 million a year ago, the central bank said in a statement on Monday.

The Reserve Bank of India database showed agricultural work opportunities contributed 48 million of the 100 million jobs generated between financial years 2017/18 and 2022/23, Basole said.

"I wouldn't call them jobs," he added. "They're just people working in agriculture or in non-farm self-employment because of lack of adequate demand for workers from businesses."

While the central bank gave a provisional estimate of the increase in employment in 2023/24, it did not detail the sectors that saw these additions. That data was only available up to the previous year.

The central bank and government did not respond to emails from Reuters seeking comment.

Prime Minister Narendra Modi, whose party lost its absolute parliamentary majority in elections last month, having to turn to allied parties to retain power, first won power in 2014, on a promise of creating 20 million jobs a year.

However, he has since faced criticism from analysts and political rivals for failing to deliver.

"The Modi government's only mission is to make sure youth are jobless," Mallikarjun Kharge, president of the main opposition party Congress said this week, after the Citibank report reignited the jobs debate in India.

Modi's party manifesto for this year's general election promised to create jobs through investments in sectors such as infrastructure, pharmaceuticals and green energy.

But the party's failure to win an absolute majority on its own was blamed on voters' disenchantment with lack of jobs and high inflation.

"Yes, there has been an enormous increase in the number of people who are, quote-unquote, employed," said India's former chief statistician, Pronab Sen. "But the bulk of this increase has come in agriculture and in casual work."

Growing farm employment was "extremely regressive" as it went against the nation's goal of moving more Indians away from agricultural work, he added.

"Look, the question is, do you really believe there's so much employment happening?" Sen said. "It seems unlikely."

The debate over India's employment data was "muddying the water," he added.

Government data shows just 20.9% of India's overall workforce earned regular wages in the form of salary, as of 2022/23.

Economists have pointed to weak consumption in the economy, which grew by just 4% in 2023/24, or half the pace of gross domestic product (GDP) which expanded at a world-beating 8.2%.

"We can have disputes on the numbers but ultimately, what we should go by is the outcome," said Rupa Rege Nitsure, an independent economist.

"If enough employment is being generated, then enough income should get generated and that should get translated into higher consumption at a broad-based level. Why are we seeing so much unevenness in consumption spending?"

By Joe Cash

BEIJING (Reuters) - China's exports likely grew at the fastest pace in fifteen months in June, as manufacturers front-load shipments in anticipation of tariffs from a growing number of the country's major export markets.

Trade data on Friday is expected to show exports grew 8.0% year-on-year by value, according to the median forecast of 31 economists in a Reuters poll, up from the 7.6% increase in May and the best pace since a 10.9% gain in March last year.

Imports likely grew 2.8% last month, faster than the 1.8% gain seen in May, suggesting factory owners are buying more parts to be turned into finished goods for export.

Stronger-than-expected exports have been one of the few bright spots for an economy that is otherwise still struggling for momentum despite officials' efforts to stimulate domestic demand following the pandemic. A prolonged property slump and worries about jobs and wages are weighing heavily on consumer confidence.

The $18.6 trillion dollar economy is so overwhelmingly competitive across so many sectors, including steel, solar and consumer goods, that even new trade restrictions wouldn't really slow the export juggernaut, analysts say.

Still, as the number of countries considering stepping up curbs on Chinese goods increases, so too does the pressure on its exports to prop up progress towards the government's economic growth target for this year of around 5%.

Washington in May hiked tariffs on an array of Chinese imports, including a quadrupling of duties on Chinese electric vehicles to 100%, while Brussels last week confirmed it would also impose tariffs, but only up to 37.6%.

Exporters are also on edge heading into U.S. elections in November in case either major party tips fresh trade restrictions.

Turkey last month also announced it would impose a 40% additional tariff on Chinese-made EVs, while Canada said it was considering curbs.

Meanwhile, Indonesia plans to impose import duties of up to 200% on textile products, which China is its biggest supplier of, India is monitoring cheap Chinese steel, and talks with Saudi Arabia over a free trade agreement have reportedly stalled over dumping concerns.

A global cyclical upturn in the electronics sector should also help exporters in the world's No.2 economy, which is investing heavily in expanding production of older chips, known as legacy chips, that can be found in everything from smartphones to fighter jets.

South Korean exports to China - a leading indicator of China's tech imports - jumped 16.8% last month.

The European Commission has reportedly began canvassing the bloc's semiconductor industry for its views on China's expanded production of legacy chips, which could constrain the Asian giant's strong export performance in electronics.

The median estimate in the poll predicted China's trade surplus will come in at $85.0 billion, up from 82.62 billion in May.

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) -The U.S. is "no longer an overheated economy" with a job market that has cooled from its pandemic-era extremes and in many ways is back where it was before the health crisis, Fed Chair Jerome Powell said in remarks to Congress that suggested the case for interest rate cuts is becoming stronger.

"We are well aware that we now face two-sided risks," and can no longer focus solely on inflation, Powell told the Senate Banking Committee on Tuesday. "The labor market appears to be fully back in balance."

Powell told lawmakers that he did not want "to be sending any signals about the timing of any future actions" on interest rates, a stance consistent with the chair's recent efforts to focus attention more on the evolution of economic data - and the possible choices the Fed might make in response - and less on firm guidance about what might happen on what timetable.

Still, with a Nov. 5 presidential election on the horizon and just two scheduled Fed meetings before it, Powell was quizzed by Democrats about the risks to the job market of not cutting rates soon, and by Republicans about the pain to households of inflation that remains above the central bank's 2% target.

"Any move to lower rates before Nov. 5 would be a bad perception," Senator Kevin Cramer, Republican of North Dakota, said to Powell, said in remarks that went on to pledge support for central bank independence.

By Rae Wee and Sameer Manekar

SINGAPORE (Reuters) - Asian stocks edged marginally lower on Wednesday after Federal Reserve Chair Jerome Powell offered little hints on the timing of U.S. rate cuts expected later this year, even as he signalled greater confidence that inflation was coming to heel.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.27% in early Asia trade, losing some steam after surging to an over two-year high at the start of the week.

In New Zealand, the kiwi rose 0.05% to $0.6128 ahead of a rate decision by the country's central bank later in the day, where focus will be on any guidance for its rate outlook.

Expectations are for the Reserve Bank of New Zealand (RBNZ) to maintain its hawkish bias at the conclusion of its monetary policy meeting, with bets for the central bank to cut rates just once before year-end.

"I think the RBNZ should be easing sooner - a lot sooner than what they expect," said Jarrod Kerr, chief economist at Kiwibank.

"I think we've seen enough in the local data to expect inflation to fall back to 2%... we think they should be cutting in August but they probably will start cutting in November."

Stocks have rallied globally on the back of growing expectations of a Fed easing cycle likely to commence in September, with Powell saying on Tuesday that the U.S. is "no longer an overheated economy".

However, Powell provided little clues on how soon those rate cuts could come.

"He suggested that the Fed's reaction function is shifting to an easing bias given the significantly cooling labour market, but he nonetheless declined to offer a clear timeline on rate cuts," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

"In any event, the market has been pricing in almost two full Fed rate cuts this year, and Powell's statements didn't shift those expectations much."

Japan's Nikkei rose 0.08%, helped by a weaker yen which last stood at 161.47 per dollar.

Data on Wednesday showed Japan's wholesale inflation accelerated in June as the yen's declines pushed up the cost of raw material imports, keeping alive market expectations for a near-term interest rate hike by the central bank.

The Bank of Japan said on Tuesday that some market players called on the central bank to slow its bond buying to roughly half the current pace under a scheduled tapering plan due this month.

In other currencies, the dollar held broadly steady, with sterling little changed at $1.2787 while the euro dipped 0.01% to $1.0813.

Oil prices rebounded following three days of declines after an industry report showed U.S. crude and fuel stockpiles fell last week, indicating steady demand, and as the outlook for interest rate cuts improved. [O/R]

Brent futures rose 0.24% to $84.86 a barrel, while U.S. West Texas Intermediate (WTI) crude ticked 0.29% higher to $81.65 per barrel.

Gold gained 0.07% to $2,365.09 an ounce. [GOL/]

(Reuters) - The S&P 500 and Nasdaq notched record-high closes on Tuesday, fueled by gains in Nvidia (NASDAQ:NVDA) after U.S. Federal Reserve Chair Jerome Powell told lawmakers that more "good" economic data would strengthen the case for rate cuts. 

AI chipmaker Nvidia climbed 2.5%, offsetting declines in other chip stocks.

Microsoft (NASDAQ:MSFT) dipped 1.4%, while Tesla (NASDAQ:TSLA) added 3.7%, bringing its gain in 2024 to 5%.

It was the Nasdaq's sixth straight record-high close and the S&P 500's fifth straight as optimism about the growth of AI across the U.S. corporate landscape offset uncertainty around the Fed's rate-cut path. 

In testimony before Congress, Powell said that while inflation "remains above" the 2% soft-landing target, it has been improving in recent months and "more good data would strengthen" the case for interest-rate cuts.

However, the central bank chief insisted he was not "sending any signals about the timing of any future actions."

Markets have stuck to pricing in 50 basis points of easing for the year, seeing a nearly 72% chance for a 25 bps cut by the Fed's September meeting, according to CME's FedWatch. Those bets were at under 50% a month ago.

"The U.S. economy, and currently the U.S. labor market, have been surprisingly resilient through the course of 2024 and our base case is that a recession is not the highest probability outcome, but rather we should continue to expect moderate growth through the balance of this year and into next," said Bill Northey, senior investment director at U.S. Bank Wealth Management.

Inflation data is also due this week, including Thursday's consumer price index and the producer price index reading on Friday.

Shares of JPMorgan and Wells Fargo climbed over 1% and Citi rose 2.8%. The three banks will release quarterly results on Friday, marking the start of second-quarter earnings season.

Reuters reported that the Fed was considering a rule change that could save big banks billions of dollars in capital.

Analysts on average see S&P 500 companies increasing their aggregate earnings per share by 10.1% in the second quarter, up from an 8.2% increase in the first quarter, according to LSEG I/B/E/S data.     

The S&P 500 climbed 0.07% to end the session at 5,576.98 points.

The Nasdaq gained 0.14% to 18,429.29 points, while the Dow Jones Industrial Average declined 0.13% to 39,291.97 points.

Even as the S&P 500 rose, declining stocks outnumbered rising ones within the index by a 1.5-to-one ratio.

Tempus AI rose almost 4% after JPMorgan, Morgan Stanley and other brokerages initiated coverage of the stock with bullish ratings. The genetics testing firm, which receives "immaterial" revenue from its AI business, is down around 7% from the $37 price set in its June IPO. 

Volume on U.S. exchanges was relatively light, with 9.6 billion shares traded, compared with an average of 11.6 billion shares over the previous 20 sessions. (This story has been refiled to add a dropped letter in the advisory line)

By Yoruk Bahceli and Samuel Indyk

(Reuters) -A shock election win for France's leftist alliance has reinforced wariness among investors who had already braced for the risk of political deadlock and a policy paralysis that's unlikely to improve the country's creaking public finances.

The left-wing New Popular Front (NFP) alliance won the most seats in Sunday's election, but fell far short of an absolute majority, a big surprise after Marine Le Pen's far-right National Rally (RN) led opinion polls.

France, at the centre of the euro project and the bloc's second biggest economy, still faces a hung parliament and taxing negotiations to form a government as markets had already anticipated - just with the left in pole position, rather than the far-right.

The risk premium, or spread, for holding France's debt over Germany's was at 65 basis points on Monday, a touch lower from Friday. It remains below the 12-year high hit in June at 85 bps.

Still, that gap is not expected to tighten again rapidly with concern fixed on what France's new political climate means for its stretched public finances that have left it facing European Union disciplinary measures.

Debt stood at 110.6% of output in 2023.

"For any budget to be passed in the new assembly, probably at the margin some fiscal loosening is required to get a compromise," said Kevin Zhao, head of global sovereign and currency at UBS Asset Management, which manages $1.7 trillion in assets.

Market relief proved tentative on Monday. France's main CAC 40 stocks index, down 3.7% since Macron called the election, rose as much as 0.8% on Monday then gave up all its gain.

Shares in France's three biggest lenders - BNP Paribas (OTC:BNPQY), Societe Generale (OTC:SCGLY) and Credit Agricole (OTC:CRARY) - which have dropped as much as 9.8% since June 9, also reversed earlier gains and were down 0.4%-1.2% at 1418 GMT.

Banks had been hard hit in the run-up to the vote on concerns that higher political uncertainty would translate into increased economic risks and fears of possible windfall taxes.

With the left more than 100 seats short of an absolute majority and President Emmanuel Macron's centrist grouping in second place, a hung parliament was still seen as the best outcome for investors in French assets, with it expected to limit the left's spending plans and avert a potential budget-driven market crisis.

The NFP's plans include scrapping Macron's pension reform raising the minimum wage and capping the prices of key goods.

It says the costs of its program would be offset by measures including tax increases.

But some investors had deemed an NFP absolute majority a bigger threat to markets than the RN, as the left alliance has said it doesn't plan to reduce France's high budget deficit.

"When you look at the composition of the parliament, the bar for the far-left to start doing anything market unfriendly is very, very high," said Gabriele Foa, portfolio manager at Algebris Investments, noting that the more moderate Socialists won a sizable share of the NFP seats.

Possibilities for a new government include the NFP forming a minority government, Macron peeling off Socialists and Greens from the NFP to isolate Jean-Luc Melenchon's far-left France Unbowed for a coalition with his own bloc, or a technocratic government.

By David Randall

NEW YORK (Reuters) - A decline of 10% in the benchmark S&P 500 stock index before the U.S. presidential election in November is "highly likely," Morgan Stanley Chief Investment Officer Mike Wilson said in an interview on Monday with Bloomberg TV.

Among the reasons for a decline are uncertainty over how swiftly the Federal Reserve will bring interest rates down from nearly two-decade highs and falling pricing power on the part of companies, increasing the likelihood of disappointing earnings results, he said.

"The average company has not had good earnings results," he said, adding that a nearly 17% gain in the S&P 500 for the year to date has been powered by a small number of companies.

At the same time, price to earnings multiples have been rising. "Valuations to me look very unexciting," he said.

Wilson maintained a bearish outlook for the majority of this year, one of few prominent forecasters to do so. In late May, he lifted his base-case 12-month forecast for the S&P500, an estimate of what the fair value of the index will be in a year, to 5,400 points. At the time, that was only 2% above its level but 20% higher than his previous forecast of 4,500.

The S&P 500 closed Monday at 5,572, some 3% above Wilson's 12-month target price.

By Kevin Buckland

TOKYO (Reuters) - The U.S. dollar hung near a multi-week low versus major peers on Tuesday, still smarting from Friday's unexpectedly soft jobs report as traders awaited testimony from Federal Reserve Chair Jerome Powell for clues on the path of interest rates.

The euro held its ground after Monday's sharp swings as investors come to terms with a hung parliament in France, which points to potential political gridlock but removes many fiscal concerns stemming from far-right or leftist victories.

The U.S. dollar index, which measures the currency against the euro, sterling, yen and three other major peers, was flat at 104.99 in early Asian hours, sticking close to the overnight low of 104.80, a 3 1/2-week trough.

The index slumped 0.9% last week, exacerbated by Friday's monthly payrolls report, which boosted bets for the Fed to soon start cutting rates.

Traders currently set about 76% odds for a rate cut at the September meeting, up from 66% a week ago, according to the CME Group's (NASDAQ:CME) FedWatch Tool. Another cut is expected by December.

Chair Powell gives two days of testimony before Congress, beginning later on Tuesday with the Senate and followed by the House on Wednesday.

Consumer price data on Thursday could also be crucial, market watchers said, with recent numbers showing a cooling from unexpectedly high levels at the start of the year.

"All ears will be on how Powell communicates the risks between stubborn inflation and unnecessary labour market deterioration," said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY), who expects the U.S. dollar to decline over the longer term.

Meanwhile, markets have taken "a fairly sanguine view" of the French poll results, Attrill added, "viewing political gridlock - and with that a high degree of fiscal policy inertia - as the most likely way forward for France, a more benign scenario than any of the alternatives."

The euro was little changed at $1.0827, sitting not far from Monday's nearly four-week peak of $1.0845. The single currency also dipped as low as $1.07915 that same day.

Sterling traded flat at $1.28085, after rising as high as $1.28455 on Monday, its strongest since June 12.

The yen was steady at 160.91 per dollar, finding some equilibrium this week after rebounding from Wednesday's nearly 38-year trough of 161.96.

By Andy Bruce

(Reuters) - British consumer spending contracted in June, hurt by bad weather, according to surveys on Tuesday that added to recent signs of the country's tepid economic growth that the new Labour government has promised to boost.

Barclays said spending on its credit and debit cards fell by 0.6% in annual terms in June - the first drop since February 2021. It linked the fall to cool weather at the start of month.

"Once again, our data demonstrates the undeniable impact that unseasonable weather can have on consumer spending," Karen Johnson, Head of Retail at Barclays, said.

"The sluggish demand at the start of June even caused some fashion brands to adjust their sales schedules, although I was pleased to see that the situation has since improved with the arrival of sunnier days."

Similarly, the British Retail Consortium cited chilly weather as it reported a 0.2% drop in sales values in June compared with a year earlier, after a 0.7% rise in May.

The readings chimed with other signs of slowing growth, including business surveys, after the economy rebounded in the first quarter from a recession in the second half of 2023.

Improving economic growth is the top priority of new Prime Minister Keir Starmer whose Labour Party swept to a landslide victory in parliamentary elections on July 4.

Barclays said spending at supermarkets fell for the first time in two years last month but there were reasons for optimism.

"While June’s data suggests a weak month, the view looking ahead to the second half of the year, as we see it, is one of falling interest rates, growing real incomes, and increasing confidence among consumers to spend and businesses to invest," said Barclays' chief UK economist Jack Meaning.

Accountants KPMG, sponsor of the BRC's retail sales survey, said the economic environment was improving but said many retailers were still struggling.

Retail sales volumes, excluding petrol, remain slightly below their pre-pandemic level, according to official data.