Investors eye possible rate cuts as new inflation and labor data shape market direction
Easing inflation at both wholesale and consumer levels has reinforced investor expectations that the Federal Reserve could begin cutting interest rates as soon as September, despite lingering trade policy uncertainties and mixed labor data.
The S&P 500 rose 0.4% to 6,045.26 on Thursday, placing it within 1.6% of its record high. The Dow Jones Industrial Average gained 101.85 points, or 0.2%, to 42,967.62, while the Nasdaq composite added 46.61 points, or 0.2%, to 19,662.48.
The increase followed a government report showing that wholesale inflation came in lower than economists had projected. The report was released a day after data on consumer inflation also came in below expectations. The yield on the 10-year Treasury declined to 4.35% from 4.41% late Wednesday and from about 4.80% earlier this year.
A separate report on jobless claims showed that slightly more workers filed for unemployment benefits last week than economists anticipated. The total remained at the highest level in eight months.
According to Thierry Wizman, strategist at Macquarie, the combined information from the recent inflation and labor data might have already prompted the Fed to reduce its policy rate if not for the uncertainty from tariffs.
The Federal Reserve is scheduled to meet next week. Market data from CME Group shows traders generally expect no change in rates at that meeting but anticipate a rate cut could begin in September.
On the corporate front, Oracle climbed 13.3% after reporting profit and revenue above analysts' forecasts. CEO Safra Catz said the company expects revenue growth “will be dramatically higher” in its next fiscal year.
Shares of Boeing declined 4.8% after Air India said one of its flights crashed shortly after takeoff from Ahmedabad airport en route to London. The Boeing 787 Dreamliner was carrying 242 passengers and crew and crashed into a residential area. The cause has not yet been determined.
GameStop fell 22.5% following an announcement it plans to raise $1.75 billion through a zero-interest borrowing arrangement. Lenders may opt to be repaid in company stock rather than cash. Chime Financial jumped 37.4% in its first trading day on the Nasdaq.
International indexes were mixed. Hong Kong’s Hang Seng Index dropped 1.4% but remains up nearly 20% year to date. U.S. indexes have gained less than 3% over the same period.
