U.S. stock indices rose on Thursday, extending their gains after signs of a slight decline in consumer inflation pushed Wall Street to record highs on hopes of interest rate cuts.
The S&P 500 rose 1.2%, the NASDAQ Composite 1.4%, and the Dow Jones Industrial Average 0.9%, bringing all three indices to all-time highs by the close of Wednesday.
CPI cooldown boosts September rate cut bets
Wednesday’s data indicated that CPI inflation rose in April at a slower month-on-month pace than estimated, while core CPI, which excludes volatile items such as food and energy, increased by 3.6% year-over-year, down from 3.8% in March.
Although inflation fell in April, it still remains well above the Fed’s 2% annual target. This follows Tuesday’s higher-than-expected producer price index.
Given these developments, the probability of a 25 basis point rate cut in September has increased to 53.8%, according to CME’s FedWatch tool, up from 49.0% the previous week.
Weak April retail sales data, released on Wednesday, also raised hopes that inflation may cool in the coming months.
More data due on Thursday includes weekly jobless claims, the Philly Fed manufacturing index, and comments from several Fed officials.
Chubb hits record highs
In the corporate sector, low-cost retailer Walmart (WMT) is set to report its quarterly results on Thursday.
Meanwhile, shares of Chubb (CB) rose nearly 10% and hit an all-time high in pre-market trading after Warren Buffett’s Berkshire Hathaway (BRKa) reported purchasing a $6.72 billion stake in the insurer.
Cisco Systems (CSCO) rose nearly 5% after the communications equipment maker reported a better-than-expected quarterly profit.
Shares of Meta Platforms (META) fell about 0.5% as the European Commission launched an investigation into the company for potential breaches of the bloc’s online content law related to child safety risks.
The two-day rally in so-called meme stocks faded on Wednesday, with GameStop (GME) and AMC Entertainment (AMC) losing nearly 20% during the session. Both companies experienced additional double-digit losses in pre-market trading.
