S&P 500 back above 3,000 on Fed optimism

NEW YORK: Wall Street stocks pushed higher Thursday, shrugging off data that showed increased inflation and a burgeoning trade controversy related to a French tax on large technology companies.

Analysts said sentiment remained strong after Federal Reserve Chair Jerome Powell signaled on Wednesday a possible interest rate cut. Powell is due for a second day of congressional testimony today.

About 25 minutes into trading, the Dow Jones Industrial Average was at 26,998.87, up 0.5 percent.

The broad-based S&P 500 gained 0.2 percent to 3,000.13, while the tech-rich Nasdaq Composite Index climbed 0.2 percent to 8,218.23.

Hopes about a Fed interest rate cut have dominated discussion this week.

Data on Thursday showed consumer prices rose 0.1 percent in June, above analyst forecasts. However, inflation has stayed tame over the past year, with consumer prices growth slowing to 1.6 percent compared to June 2018, two tenths of a point lower than in May.

Powell cited weak inflation, along with trade-related uncertainty as factors that could compel the Fed to take action later this month to ensure the US economy stays strong. The comments were interpreted as opening the door to a rate cut.

On Wednesday, officials said US President Donald Trump had ordered an investigation into France's planned tax on internet services. The French parliament passed the tax anyway on Thursday, making Google, Apple, Facebook and Amazon principal targets of the higher taxes.

In spite of the move, shares of Amazon, Apple and Google parent Alphabet rose early Thursday, while Facebook was narrowly negative.

Health insurer UnitedHealth Group surged 4.8 percent and CVS Health leaped 6.8 percent after the Trump administration spiked a plan to curb drug rebates offered by pharma companies to middlemen.

But pharma giants Merck and Pfizer were down about two percent as the move still leaves them vulnerable to actions to curtail drug prices.