Wall Street’s main indexes have edged higher in choppy trading after data showed inflation was moderating as expected, cementing wagers that the US Federal Reserve is on track to start its policy easing cycle next month.
Labor Department data showed US consumer prices rose 0.2 per cent as expected in July, taking the headline inflation to 2.9 per cent year-on-year from 3.0 per cent in June, below economists’ expectations of 3.0 per cent growth.
“There is nothing in here that should prevent the Fed from proceeding with a rate cut in September,” said David Doyle, head of economics at Macquarie.
Bets on a 25-basis point (bps) rate cut in the Fed’s Sept. 17-18 meeting edged up, with traders pricing in a near 59 per cent chance compared to an even split between a 25-bps and 50-bps before the data, as per the CME FedWatch Tool.
“We don’t know whether it’s going to be 25 or 50 but I don’t think inflation’s going to determine that. It’s going to be the growth-oriented economic statistics, particularly the labour statistics and payrolls,” said Jack McIntyre, portfolio manager at Brandywine Global.
Seven of the 11 major S&P 500 sectors were trading higher, with information technology and financials leading gains.
Both the S&P 500 and the Nasdaq clocked their fourth straight session of gains on Tuesday following softer-than-expected producer prices data that indicated inflation continued to moderate, although it is yet to reach the US central bank’s 2.0 per cent target.
A rebound in megacap and technology stocks have helped markets recoup most of their losses from a global market rout earlier this month that was partly caused by data showing a surge in US unemployment rate in July.
In early trading on Wednesday, the Dow Jones Industrial Average rose 10.79 points, or 0.03 per cent, to 39,776.43, the S&P 500 gained 4.15 points, or 0.08 per cent, to 5,438.58 and the Nasdaq Composite gained 19.38 points, or 0.11 per cent, to 17,206.98.
The Cboe volatility index, Wall Street’s fear gauge, stayed below its long term average of 20 points for the second day at 17.47 after hitting its highest since 2020 just last week.
AI stocks Nvidia, Super Micro and Dell advanced early on, looking to continue their rally to the third straight session while most megacap and growth stocks edged higher.
Google-parent Alphabet slipped 1.5 per cent after a media report said the US Department of Justice is considering options that include breaking up the online search engine.
Kellanova surged more than 7.0 per cent after family-owned lolly giant Mars said it would buy the Cheez-It and Pringles maker in a nearly $US36 billion ($A54 billion) deal.
Cardinal Health gained 3.5 per cent after the drug distributor raised its 2025 profit forecast.
TurboTax parent Intuit slipped 1.8 per cent after Morgan Stanley downgraded its rating to “equal-weight” from “overweight”.
Advancing issues outnumbered decliners by a 2.09-to-1 ratio on the NYSE by a 1.37-to-1 ratio on the Nasdaq.
The S&P 500 posted eight new 52-week highs and one new low while the Nasdaq Composite recorded 24 new highs and 30 new lows.