U.S. stocks hit a new record amid signs of slowing inflation

At the close of trading on August 13, U.S. stocks reached a new high amid falling oil prices and the release of new inflation data that exceeded economists' expectations.

The S&P 500 broad-market index rose 0.65% and closed at a record high of 7,798.99 points. During the day, it rose above 7,800 points for the first time. The Russell 2000 small-cap index also reached a record high: it gained 0.27% and closed at 3,053.6 points. The tech-heavy Nasdaq Composite rose 0.81% for the day, while the blue-chip Dow Jones Industrial Average rose 0.13%.

The market reacted positively to the release of July’s producer price index data, which remained unchanged from the previous month. Economists surveyed by Dow Jones had expected a 0.2% increase, according to CNBC. On a year-over-year basis, producer price growth slowed from 5.5% in June to 4.7%, driven by lower energy and food prices. The weaker-than-expected PPI data was released a day after the Consumer Price Index (CPI) matched analysts’ forecasts: The CPI rose 3.4% year-over-year in July, following a 3.5% increase in June.

Following the release of producer price index data, traders estimate the probability of a Fed rate hike in September at less than 40%, according to Bloomberg.

"The current inflation picture isn't yet alarming enough to derail the market, which continues to be driven primarily by corporate earnings, — CNBC quotes Bill Mertz, head of capital markets research at U.S. Bank Asset Management. — It remains to be seen how the Fed, under the leadership of its new chairman [Kevin] Warsh, will interpret this data and whether it will take any action at all. This remains a source of some uncertainty that the market has to factor in. But for now, the gradual slowdown in CPI and PPI figures is a positive factor.”

According to producer price data, inflation in the U.S., while still significantly above the Fed’s 2% target, is showing signs of stabilizing following the surge triggered by a spike in oil prices since the start of the war with Iran, Glen Smith, CEO and Chief Investment Officer of GDS Wealth Management, noted in an interview with Bloomberg.

Oil futures fell by more than 2% on Thursday. Brent crude fell to $87.1 per barrel, while West Texas Intermediate fell to $81.25 per barrel. Prices fell as traders assessed the decline in oil demand amid the ongoing conflict between the U.S. and Iran, CNBC explained.

This article was AI-translated and verified by a human editor