Wall Street has risen 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.
A separate report showed weekly jobless claims unexpectedly fell last week, indicating that the labour market remains tight.
“The PPI confirmed the cooling inflation shown in yesterday’s CPI but the lower-than-expected weekly jobless claims number was a reminder of continued labour market tightness,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
“The Fed is still on track to raise interest rates in a couple of weeks, and investors will shift their focus to corporate balance sheets as earnings season kicks into gear.”
Traders continue to expect a 21 per cent probability that the US central bank will hike borrowing costs in its November meeting.
Markets have fully priced in a 25-basis-point rate hike later in July.
Seven of the 11 major S&P 500 sectors advanced, with communications services leading gains, rising 1.5 per cent.
In early trading, the Dow Jones Industrial Average was up 92.93 points, or 0.27 per cent, at 34,440.36, the S&P 500 was up 23.92 points, or 0.53 per cent, at 4,496.08, and the Nasdaq Composite was up 131.84 points, or 0.95 per cent, at 14,050.80.
On Wednesday, 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.
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.
PepsiCo added 1.4 per cent 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.
Delta Air Lines gained 1.1 per cent after it lifted its full-year profit outlook following stronger-than-expected second-quarter earnings on a relentless post-pandemic travel boom.
Overall, earnings for the S&P 500 constituents are expected to have dropped 6.4 per cent in the second quarter, Refinitiv data showed.
Meta Platforms, which recently launched Twitter-rival Threads, outpaced gains among big growth stocks, adding 1.6 per cent.
It is set to release a commercial artificial intelligence (AI) model, as per a report.
Markets will parse remarks by policymakers during the day, including Fed Board Governor Christopher Waller, to gauge the tone of the central bank on monetary policy tightening.
Advancing issues outnumbered decliners by a 2.03-to-1 ratio on the NYSE and by a 1.82-to-1 ratio on the Nasdaq.
The S&P index recorded 29 new 52-week highs and no new lows while the Nasdaq recorded 58 new highs and 15 new lows.