NEW YORK: Wall Street rose on Thursday after milder-than-feared July consumer prices data fueled hopes the Federal Reserve could leave interest rates unchanged next month.
Data showed headline and core consumer prices both climbed by 0.2% in July, logging an annual rise of 3.2% and 4.7%, respectively. Buoyed by inflation numbers, traders not only expect the central bank to stop further monetary tightening in 2023, they are also betting the Fed would start cutting interest rates early next year.
“Inflation has returned to the good old days where in 2019 we saw an average monthly increase of around 0.2% ... The Fed, therefore, might feel it can pause as planned and not raise interest rates in September,” said George Mateyo, chief investment officer at Key Private Bank.
San Francisco Fed President Mary Daly was cautious in her remarks and said that while recent inflation data was moving in the right direction, more progress was needed before she would feel comfortable that the central bank had done enough.
Limiting gains in megacap growth names, yield on the benchmark 10-year treasury note reversed course to inch higher at 4.02%.
Amazon.com, Microsoft and Apple added between 1.1% and 0.5%.
The tech-heavy Nasdaq led Wall Street lower on Wednesday, with heavyweight Nvidia falling 4.7%, followed closely by the other “Magnificent Seven” megacap stocks that drove this year’s stock rally.
Nasdaq has gained about 32.2% so far this year on hopes of a soft landing for the US economy in the face of the Fed’s aggressive interest rate hikes, and optimism over the scope of artificial intelligence.
At 11:31 a.m. ET, the Dow Jones Industrial Average was up 255.47 points, or 0.73%, at 35,378.83, the S&P 500 was up 30.95 points, or 0.69%, at 4,498.66, and the Nasdaq Composite was up 99.03 points, or 0.72%, at 13,821.05.
Separately, the number of Americans filing new claims for unemployment benefits rose by 248,000 last week, more than estimates of 230,000 additions.
On the earnings front, Walt Disney rose 3.2% after beating Wall Street estimates for quarterly adjusted profit per share.
Capri surged 56.2% after larger rival Tapestry said it would buy the Michael Kors parent in an $8.5 billion deal. Tapestry’s shares fell 12.6%.
US-listed shares of Alibaba jumped 6.7% after the e-commerce conglomerate reported upbeat quarterly sales on the back of improved consumer sentiment.
Heightening trade worries, President Joe Biden on Wednesday signed an executive order that prohibits some new US investment in China in sensitive technologies such as computer chips and requires government notification for investment in other tech sectors.
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