S&P500 Rises on Encouraging Inflation Data

Stocks experienced gains on Thursday following a key inflation reading that was lower than anticipated. The S&P 500 rose by 0.7%, while the Dow Jones Industrial Average gained 65 points, or 0.2%. The Nasdaq Composite saw a significant increase of 1.4%. Overall, the broad market has risen by more than 3% since the Federal Reserve initiated its rate-hike campaign in March 2022.

One notable stock in the cybersecurity sector, Palo Alto Networks, rebounded by 2.8% from Wednesday's losses. Additionally, shares of MGM Resorts and Alphabet showed strong increases of 5.1% and 4.3%, respectively.

The producer price index (PPI) report for June revealed a smaller-than-expected rise, which added to the positive sentiment following Wednesday's consumer price index (CPI) data. The PPI measures the cost wholesalers pay for goods, and it showed a 0.1% increase in June, lower than the anticipated 0.2% increase predicted by economists. The core PPI, which excludes volatile food and energy prices, also climbed by 0.1%, falling below expectations.

While the PPI confirmed the decrease in inflation from the CPI report, the lower-than-expected number of weekly jobless claims served as a reminder of how tight the labor market is.

Currently, the stage is set for the Federal Reserve to proceed with its plan to raise interest rates in the coming weeks. Thursday's stock price surge alleviated concerns that the Federal Reserve's efforts to combat stubborn inflation might push the economy into a recession. Investors will now shift their focus to corporate balance sheets as the earnings season kicks off.