U.S. Stocks Hit Record Highs as Wholesale Inflation Eases and Oil Prices Drop
The S&P 500 climbed 0.7% and topped its prior record set last week. The Dow Jones Industrial Average added 69 points (0.1%) and the Nasdaq composite gained 0.8%. Wall Street relaxed after a report showed prices at the U.S. wholesale level were 4.7% higher last month than a year earlier while it was not as high as June?s 5.5% inflation rate at the wholesale level and it was slightly better than economists expected.
Oil prices eased back on Thursday, helping to limit worries about inflation. The price for a barrel of Brent crude oil fell 2.1% to $87.07. It?s been swinging sharply recently and pinballed between $72 and $102 last month as hopes rose and fell that a deal in the war could allow oil tankers to freely exit the Middle East again and deliver crude worldwide.
If inflation continues to trend that way, the Federal Reserve could decide to hold off on hikes to interest rates. Fed officials are split on whether they should have already begun hiking interest rates yet still Thursday?s report followed a similar update on inflation at the U.S. consumer level the day before, has traders now betting on just a 35% chance that the Fed will raise the federal funds rate at its next meeting in September. Any increase by the Fed would be the first in more than three years. Lower mortgage rates could also drive more activity in the housing market and the average long-term U.S. mortgage rate fell this week for the first time in six weeks.
Stocks in the real-estate industry climbed to some of the market?s bigger gains. When interest rates are lower and bonds are paying less in yield, the dividends that many real-estate investment trusts pay look more attractive. AvalonBay Communities which owns apartments across the country, rose 2.3%. Homebuilder D.R. Horton added 2.8%. Fossil Group climbed 5.9% after the seller of watches and jewelry became one of the latest companies to report better results for the latest quarter than analysts expected. Cisco Systems fell 8.4% even though the tech giant reported stronger profit and revenue for the latest quarter than Wall Street expected.
In stock markets abroad, indexes dipped in Europe following a mixed finish in Asia. South Korea?s Kospi again had one of the world?s biggest moves and jumped 3.6%. Seoul has been at the center of the world?s swings for artificial-intelligence stocks because its market is dominated by two tech giants, Samsung Electronics and SK Hynix.
Treasury yields sank in the bond market which eases pressure on stocks and other investments. The yield on the 10-year Treasury fell to 4.65% from 4.68% late Wednesday and from 4.72% on Monday, though it?s still well above its 3.97% level from before the war with Iran sent oil and gasoline prices surging.
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