US stocks inched higher on Thursday following the June consumer price index (CPI) report, which revealed a more significant cooling in inflation than analysts had anticipated.
The S&P 500 and Nasdaq are nearing record highs. The 10-year Treasury yield dropped nine basis points to 4.181%, and the two-year note fell 14 basis points to 4.49%.
Last month, CPI rose by 3% annually, below the expected 3.1%. On a monthly basis, CPI decreased by 0.1%, defying predictions of a 0.1% rise.
Falling gas prices contributed to the overall reading, while high housing costs showed signs of slowing, marking their slowest growth rate since 2022.
This reading may pave the way for the Federal Reserve to start reducing interest rates. Odds of a rate cut at this month’s policy meeting have increased slightly following the CPI report, though a September cut remains the most likely. According to the CME FedWatch Tool, investors see an 80% chance of a rate cut in September, with growing odds for another cut in November or December.
“The latest inflation numbers put us firmly on the path for a September Fed rate cut,” said Seema Shah, Chief Global Strategist at Principal Asset Management. “The smallest gain in core CPI since 2021 surely gives the Fed confidence that Q1’s hot CPI readings were a bump in the road and builds momentum for multiple rate cuts this year.”
US Indexes Performance Shortly After the 9:30 a.m. Opening Bell on Wednesday:
- S&P 500: 5,640.36, up 0.1%
- Dow Jones Industrial Average: 39,789.77, up 0.2% (68 points)
- Nasdaq Composite: 18,646.76, unchanged
Other Notable Events:
- Congress is making another attempt to ban stock trading by its members and their families.
- Goldman Sachs outlines the potential impact of a Trump win on the stock market.
- PIMCO warns that credit markets are currently too risky and vulnerable to shocks for investors.
Commodities, Bonds, and Crypto:
- Oil: West Texas Intermediate crude rose 0.2% to $82.30 a barrel. Brent crude increased 0.2% to $85.26 a barrel.
- Gold: Rose 1.3% to $2,411 per ounce.
- 10-year Treasury Yield: Fell nine basis points to 4.181%.
- Bitcoin: Climbed 1.3% to $58,014.
