NEW YORK: Wall Street rose on Thursday after producer prices data provided further evidence of inflation cooling in the world’s largest economy, and stoked hopes that the Federal Reserve will soon end its monetary policy tightening.
US producer prices barely rose in June and the annual increase in producer inflation was the smallest in nearly three years.
Keeping a lid on optimism, a separate report showed weekly jobless claims unexpectedly fell last week, indicating that the labor market remains tight.
Traders expect a 20% probability that the central bank will hike borrowing costs in its November meeting but have fully priced in a 25-basis-point rate hike later in July.
“The giant oil tanker of inflation, so to speak, is turning toward a less inflationary path, and that is having broad impact across the market,” said David Russell, vice president of market intelligence at TradeStation.
“Investors are now at a point where they’re like ‘let’s focus on earnings’.” During the previous session, the Nasdaq and the S&P 500 closed at over a year’s high, with megacap stocks leading gains after the CPI report showed consumer prices registered their smallest annual increase in more than two years.
At 11:53 a.m. ET, the Dow Jones Industrial Average was up 36.37 points, or 0.11%, at 34,383.80, the S&P 500 was up 24.31 points, or 0.54%, at 4,496.47, and the Nasdaq Composite was up 152.52 points, or 1.10%, at 14,071.49.
Five of the 11 major S&P 500 sectors advanced, with communications services leading gains boosted by a 4.9% jump in Alphabet.
The Google-parent said it is rolling out its artificial- intelligence chatbot, Bard , in Europe and Brazil on Thursday, the product’s biggest expansion since its February launch and pitting it against Microsoft-backed rival ChatGPT.
As US inflation cools and growth remains resilient, bullish investors are now counting on the second-quarter earnings season to provide more fuel for the rally in stocks.
Delta Air Lines gained 0.6% after it lifted its full-year profit outlook following stronger-than-expected second-quarter earnings on a relentless post-pandemic travel boom.
PepsiCo added 1.0% on raising its annual revenue and profit forecasts for the second time, banking on resilient demand for its snacks and beverages as well as price hikes.
Overall, earnings for the S&P 500 constituents are expected to have dropped 6.4% in the second quarter, Refinitiv data showed.
Meta Platforms, which recently launched Twitter-rival Threads, added 1.5%. It is set to release a commercial AI model, as per a report.
Advancing issues outnumbered decliners by a 2.83-to-1 ratio on the NYSE and by a 1.99-to-1 ratio on the Nasdaq.
The S&P index recorded 42 new 52-week highs and no new low, while the Nasdaq recorded 107 new highs and 29 new lows.