NEW YORK (AP) — U.S. stocks drifted higher following another encouraging update on inflation. The S&P 500 added 0.4% Thursday and is sitting less than 2% below its record. The Dow Jones Industrial Average rose 0.2%, and the Nasdaq composite rose 0.2%. Treasury yields fell again in the bond market after an update on inflation at the wholesale level came in better than expected, while a report on joblessness was slightly worse than forecast. That raised expectations for the Federal Reserve to begin cutting interest rates later this year. Oracle helped lift the stock market following its better-than-expected profit report and forecast for upcoming growth.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — U.S. stock indexes are drifting higher on Thursday following another encouraging update on inflation.
The S&P 500 was 0.3% higher in late trading and sitting just 1.7% below its record. The Dow Jones Industrial Average was up 90 points, or 0.2%, with an hour remaining in trading, and the Nasdaq composite was 0.2% higher.
Oracle pushed upward on the market after jumping 13.8%. The tech giant delivered stronger profit and revenue for the latest quarter than analysts expected, and CEO Safra Catz said it expects revenue growth “will be dramatically higher” in its upcoming fiscal year.
That helped offset a 4.9% loss for Boeing after Air India said a London-bound flight crashed shortly after taking off from Ahmedabad airport Thursday with 242 passengers and crew onboard. The Boeing 787 Dreamliner crashed into a residential area near the airport five minutes after taking off. The cause of the crash wasn’t immediately known.
Stocks broadly got some help from easing Treasury yields in the bond market following the latest update on inflation. Thursday’s said inflation at the wholesale level wasn’t as bad last month as economists expected, and it followed a report on Wednesday saying something similar about the inflation that U.S. consumers are feeling.
Wall Street took it as a signal that the Federal Reserve will have more leeway to cut interest rates later this year in order to give the economy a boost.
The Federal Reserve has been hesitant to lower interest rates, and it’s been on hold so far this year after cutting at the end of last year, because it’s been waiting to see how much President Donald Trump’s tariffs will hurt the economy and raise inflation. While lower rates can goose the economy by encouraging businesses and households to borrow, they can also accelerate inflation.
The yield on the 10-year Treasury fell to 4.35% from 4.41% late Wednesday and from roughly 4.80% early this year.
Besides the inflation data, a separate report on jobless claims also helped to weigh on Treasury yields. It said slightly more U.S. workers applied for unemployment benefits last week than economists expected, and the total number remained at the highest level in eight months. That could be an indication of a rise in layoffs across the country.
“We believe that were it not for the uncertainty caused by the tariffs, the combined information coming from the inflation and labor-market data would have compelled the Fed to have resumed cutting its policy rate by now," according to Thierry Wizman, a strategist at Macquarie.
The Fed's next meeting on interest rates is scheduled for next week, but the nearly unanimous expectation on Wall Street is that it will stand pat again. Traders are betting it's likely to begin cutting in September, according to data from CME Group.
Trump’s on-and-off tariffs have raised worries about higher inflation and a possible recession, which sent the S&P 500 roughly 20% below its record a couple months ago. But stocks have since rallied nearly all the way back on hopes that Trump would lower his tariffs after reaching trade deals with other countries.
Many of Trump's tariffs are on hold at the moment to give time for negotiations, but Trump added to the uncertainty late Wednesday when he suggested the United States could send letters to other countries at some point “saying this is the deal. You can take it or you can leave it.”
On Wall Street, Chime Financial jumped 38.9% in its first day of trading on the Nasdaq. The technology company is trying to be the main financial hub for customers, connecting them with its bank partners.
GameStop dropped 22.8% after saying it plans to raise $1.75 billion by borrowing at zero interest rates, though the lenders could choose to be repaid in the video-game retailer's stock instead of cash.
In stock markets abroad, indexes were mixed across Europe and Asia amid mostly modest movements. Hong Kong’s Hang Seng was an outlier, and it tumbled 1.4% to give back some of its strong recent gains.
Hong Kong's index is still up nearly 20% for the year so far, towering over the U.S. stock market's gain of less than 3%.
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AP Writers Matt Ott, Elaine Kurtenbach and Seung Min Kim contributed.
Stan Choe, The Associated Press
