4:05pm: Hopes of a ‘soft landing’ rise
By Thursday's close, the Dow had risen 0.1% at 34,395, the S&P 500 was up 0.9% at 4,510 and the Nasdaq added 1.6% to finish at 14,139.
Fresh from yesterday's post-CPI surge, stocks are on the rise again as hopes of a 'sot landing' return following today's PPI and claims data, according to Chris Beauchamp, Chief Market Analyst at online trading platform IG.
“It looks like markets are once again crossing their fingers and hoping for a soft landing," Beauchamp noted.
"The labour market remains solid but with prices easing investors are allowing themselves to contemplate the possibility that Powell may actually achieve his goal of bringing down inflation without tipping the economy into recession.”
12:05pm: S&P 500 on track for four straight days of gains
US stocks were higher in noon trading after June’s producer price index (PPI) increased at a smaller pace than expected.
At midday, the Dow gained 50 points to 34,397, while the S&P 500 added 26 points at 4,498 and the tech-heavy Nasdaq rose 157 points to 14,076.
“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 labor market tightness,” Morgan Stanley Global Investment Office head of model portfolio construction Mike Loewengart said.
Notable movers included shares of Delta Air Lines, Inc, which rose as much as 4% after the airline operator reported its highest-ever quarterly earnings and revenue, and raised its 2023 earnings forecast.
9:40am: PPI reading supports gains
US stocks opened higher buoyed by another batch of economic data that shows inflation is cooling and strong earnings reports from Delta and Pepsi.
The producer price index (PPI) rose 0.1% in June, below the consensus expectation of 0.2%. Core PPI, which excludes food, energy, and trade services, rose 0.1%, below the expected 0.2%.
“The message from the data is obvious: The Fed does not need to hike further,” Pantheon Macroeconomics chief economist Ian Shepherdson commented. “They will, later this month, but it will be the last hike, and it will be a mistake.”
Meanwhile, initial jobless claims for last week fell to 237,000, down from 248,000 in the week before. Analysts had been expecting 250,000 claims.
“The dip in jobless claims should be viewed with great skepticism because the seasonals can’t cope with shifts in the timing and extent of the annual automakers’ retooling shutdowns,” Shepherdson noted.
“We can’t take the weekly data seriously again until mid-August, by which time the distortions will be over. For the next few weeks, anything can happen; a hefty rebound next week is a decent bet.”
Just after the opening bell, the Nasdaq had added 104 points or 0.8% at 14,034 points, the S&P 500 was up 20 points or 0.4% at 4,492 points, and the Dow Jones had gained 98 points or 0.3% at 34,445 points.
7:45am: Stocks push higher
US stocks are expected to push higher on Thursday, extending a jump in the previous session following below-forecast CPI inflation data, albeit with another key inflation reading due before the open.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) rose 0.2%, while those for the S&P 500 added 0.3%, and contracts for the Nasdaq 100 gained 0.7%.
Stocks surged on Wednesday after a cooler-than-expected June consumer price index report eased some worries that the Federal Reserve may tip the economy into a recession as it fights to bring down stubborn inflation. The DJIA added 86 points, or 0.2% to close at 34,347, while the S&P 500 and Nasdaq Composite jumped 0.7% and 1.2%, respectively, to hit their highest closing levels since April 2022.
Neil Wilson, chief market analyst at Markets.com, commented: "It was all down to the two-year low for US inflation at 3%; whilst core inflation, down to 4.8%, was way lower than expected so yields were down sharply and USD (DXY) tested the YTD lows and cracked, in turn sending gold to a month high and I think we are seeing a bit of a market recalibration to think – once again – that the Fed probably only has one more hike in the can…markets now pricing out chance of second extra hike and bringing forward timing for cuts...temptation seems to be to overread the significance of one month of data and actually the Fed will stay higher for longer – maybe less about the destination of peak and more about how long they stay there once they get there."
Investor attention today turns toward the producer price index (PPI), another key inflation gauge which could also could heavily influence future central bank interest rate hikes and decipher the road ahead for inflation.
The headline and core PPI should show monthly increases resulting in lower annual rates of approximately 0.5% and 2.7%, respectively. Additionally, the weekly initial unemployment claims data will provide insights into the state of the labour market.
The second-quarter earnings season also cranks up a gear on Thursday with results from PepsiCo, Delta Air Lines and Fastenal before the bell.
In other corporate news, Disney shares added nearly 1% in extended trading after the entertainment giant extended CEO Bob Iger’s contract through 2026, two years longer than planned.