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S&P 500 hits record high on inflation data
The Standard & Poor's 500 index hit a new record high on Wednesday after an unexpected drop in wholesale prices, a development welcomed by investors anticipating another interest rate cut by the Federal Reserve next week to support the economy. Oracle shares led the gains, jumping more than 30% after the release of a remarkable forecast related to artificial intelligence.
The S&P 500 index rose 0.6% to 6,554.36 points, while the Nasdaq Composite gained 0.5% to 21,987.145 points. Both indexes reached new daily highs. The Dow Jones Industrial Average lost 0.1% to 45,648.71 points.
The improved market sentiment was driven by the latest Producer Price Index (PPI) data, which showed wholesale prices falling 0.1% in August, compared to Dow Jones forecasts of a 0.3% increase. The core PPI, which excludes food and energy prices, also declined at the same rate, missing expectations for a 0.3% increase.
The report is seen as a positive sign for the inflation outlook in the US economy ahead of the much-anticipated Consumer Price Index (CPI) reading on Thursday.
Economists expect the monthly inflation report to show a 0.3% increase, both in the headline PPI and the core PPI, which excludes food and energy prices. If this forecast is confirmed, the annual inflation rate would rise to 2.9%, while the core rate is expected to remain unchanged at 3.1%.
If the figures are close to these estimates, the Fed will have additional grounds for another interest rate cut at its September meeting. The CME FedWatch indicator, based on interest rate futures trading, shows that markets view a quarter-point cut as a foregone conclusion. Bets on the possibility of a deeper 50 basis points (half a percentage point) cut by the central bank increased after the producer price data.
