NEW YORK: A rally in US stocks petered out on Thursday (Aug 11), with markets ending mixed as analysts weighed encouraging inflation news against expectations that the Federal Reserve (Fed) will continue to raise interest rates.
Americans received a much-welcomed sign that some inflation relief is in store early in the day when a Labor Department report showed that wholesale prices cooled sharply in July.
The producer price index (PPI) fell 0.5% compared with June, on a 9% drop in energy prices.
The news came just a day after data showed consumer price inflation also slowed last month, pulling back from a 40-year high that has left many families struggling to make ends meet.
The widely anticipated consumer price index report prompted a Wall Street rally that carried over into Thursday. But the upward momentum had mostly ebbed by the session's close.
“The market is sending a signal that the Fed is going to continue to raise rates, but the question mark is will they be aggressive, overly aggressive or will they continue on the path of the unknown?” said Peter Cardillo of Spartan Capital.
The broad-based S&P 500 closed down 0.1% at 4,207.27. But the Dow Jones Industrial rose 0.1% to end the day at 33,336.67, while the tech-rich Nasdaq Composite Index dropped 0.6% to end at 12,779.91.
The S&P 500 closed a tad lower after earlier hitting fresh three-month highs following the PPI data.
The drop in PPI raised bets in futures markets that the Fed would hike rates by 50 basis points in September instead of 75 basis points as was expected earlier in the week.
While “the market has been on a tear,” eventually the “reality does settle in” that the Fed will continue to lift interest rates based on persistently high inflation, said Patrick O’Hare of Briefing.com
As for individual stocks, news that activist investor ValueAct Capital Partners has taken a 6.7% stake in The New York Times lifted shares of the newspaper company by 10.6%.
Disney, meanwhile, was up 4.7% after reporting better-than-expected quarterly earnings, as well as a leap in paying subscribers for its streaming service. – AFP, Reuters
The Dow Jones Industrial Average rose 27.16 points, or 0.08%, to 33,336.67, while the S&P 500 slid 2.97 points, or 0.07%, to 4,207.27 and the Nasdaq Composite dropped 74.89 points, or 0.58%, to 12,779.91.
Despite its recent bounce of mid-June lows, the tech-heavy Nasdaq is down about 18% so far this year as fears of an aggressive monetary policy have sapped appetite for equities, particularly high-growth stocks.
