US stocks mixed on signs of inflation stabilizing

U.S. stocks were mixed on Thursday, after gains in the previous session on news that inflation data for the world’s largest economy came in below expectations.

The broad-based S&P 500 gained 0.3% in mid-afternoon on Wall Street, after closing 2.1% higher on Wednesday. The Nasdaq Composite – which is weighted towards tech stocks which are more sensitive to changes in interest rate expectations – fell 0.2% after closing 2.9% higher in a move that carried its gains at around 21% from a low in mid-June.

Wednesday’s figures had shown that the consumer price index in the United States rose 8.5% year on year in July, a slower annual increase than the 9.1% recorded in June and lower than expected. economists. There was no month-over-month increase in the CPI in July, following a 1.3% rise in June.

New data on Thursday revealed that prices paid to U.S. producers for goods and services recorded an unexpected drop in July – down 0.5% month-on-month, due to lower production costs. gasoline. This is the first monthly decline in the U.S. producer price index since April 2020.

On an annual basis, prices rose 9.8% in July, lower than economists’ expectations of a 10.4% increase and lower than June’s 11.3%.

“I’m not sure that alone is a needle mover,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “It’s more just a confirmation that the peak may have happened.”

Investors have been watching inflation data closely ahead of the Federal Reserve’s monetary policy meeting in September for clues about how much the central bank will raise borrowing costs to curb price growth. The Fed raised interest rates by 0.75 percentage points in back-to-back meetings over the summer.

In European stock markets, the regional Stoxx 600 closed up 0.1%. London’s FTSE 100 lost 0.5%. In Asian markets, the Hong Kong Hang Seng closed up 2.4%.

“It’s encouraging for investors to see some slowdown in inflation, but a swallow doesn’t make a spring,” said Guillaume Paillat, multi-asset portfolio investor at Aviva, pointing to strong US labor market data. published last week. “You should be careful.”

Mary Daly, chair of the San Francisco branch of the Fed, told the Financial Times on Wednesday that it was too early to “declare victory” on inflation. The senior Fed official said a half-percentage-point interest rate hike in September was her “baseline,” but she didn’t rule out another 0.75-point hike percentage.

Other Fed officials also expressed caution, with Chicago Fed Chairman Charles Evans saying on Wednesday that inflation remained “unacceptably” high.

In government debt markets, the yield on the policy-sensitive two-year U.S. Treasury bond rose 0.01 percentage point to 3.2% as its price rose, following a rally during the the previous session. The yield on the benchmark 10-year Treasury note added 0.1 percentage point to 2.88%.

In the foreign exchange markets, the dollar lost another 0.1% against a basket of six currencies after falling on Wednesday.

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