U.S. stocks pushed higher on Thursday, with the Dow Jones Industrial Average rising more than 170 points and Treasury yields easing after the latest consumer inflation numbers.
Stocks Rise Despite CPI Surprise
The Dow led gains, rebounding from a muted start to the week, while the S&P 500 and Nasdaq Composite each added 0.3%. The S&P extended record highs above 6,500, continuing a bullish run that has swept across risk assets in recent weeks.
Optimism stemmed from growing confidence that the Federal Reserve will cut interest rates next week, even as consumer prices came in slightly hotter than expected. Bitcoin also joined in the rally, ticking higher alongside equities.
Treasury Yields Ease
Bond markets signaled relief as well. The 10-year Treasury yield dropped 4 basis points to 4.002%, while the 30-year yield edged down to 4.661%. The pullback in yields suggested investors believe the CPI data won’t derail the Fed’s plans for easing monetary policy.
Breaking Down the CPI Report
The Bureau of Labor Statistics reported that the consumer price index (CPI) rose 0.4% in August, slightly above the forecasted 0.3% and higher than July’s 0.2%.
On an annual basis, inflation landed at 0.29%, matching expectations. Core CPI which strips out volatile food and energy costs stood at 0.3% month-over-month and 3.1% year-over-year, aligning closely with economists’ forecasts. Because core CPI is viewed as the Fed’s preferred inflation measure, investors took the data in stride.
Jobless Claims Add to the Mix
The Labor Department also released weekly jobless claims, which showed a surprise uptick. 263,000 Americans filed for unemployment benefits, compared with an expected 235,000. That’s a rise of 27,000 from the prior week, underscoring some softening in the labor market.
Outlook
Despite the hotter CPI print and rising jobless claims, Wall Street remains confident the Fed will move forward with a rate cut at next week’s policy meeting. With equities at record highs and yields retreating, investor sentiment is still firmly tilted toward optimism.
