U.S. stocks neared record highs on Thursday after several economic reports came in close to expectations.
The Standard & Poor’s 500 rose 0.7%, bringing it back within 1.3% of the record it set in July after a volatile summer and on track for its fourth winning week in the past five.
The Dow Jones Industrial Average rose 0.6%, and the Nasdaq Composite added 1%.
Nvidia was the strongest force lifting the S&P 500, rising another 1.9%, bringing its gains to nearly 16% this week. The company’s shares have stabilized recently after falling more than 20% over the summer on concerns that investors had bid up the stock too much in an enthusiasm for artificial intelligence technology.
That helped offset a 12.4% drop in Moderna and other major tech stocks after the vaccine maker said it now expects to break even in 2028, beating its earlier forecast of 2026. The company saw its sales plummet due to the impact of COVID-19. It also plans to cut research and development spending by 20% between 2025 and 2028 due to the pandemic.
In the bond market, Treasury yields remained relatively steady while reports on job cuts and inflation contained few surprises. The data did little to change the market’s prevailing view that the U.S. economy is slowing along with inflation and that the Federal Reserve will cut interest rates next week in the hope of protecting the job market and staving off a recession.
The number of U.S. workers applying for unemployment benefits rose last week but remains low compared to historical records, according to a report. Wholesale prices rose 1.7% in August from a year earlier, another person said. That slowed from July’s inflation rate, but an underlying measure that economists view as a better predictor of future trends also rose more than expected.
The inflation data was similar to Wednesday’s report on U.S. consumer-level prices, which led traders to continue to expect the Fed to cut interest rates by its usual size of a quarter-point next week, rather than the larger half-point cut that some had expected.
Lower interest rates help the economy and boost investment prices, but they can also lead to more inflation.
In the bond market, the yield on the 10-year Treasury note edged up to 3.68 percent from 3.66 percent late Wednesday, stabilizing somewhat after falling since April on expectations of upcoming rate cuts. The easing has helped push the average U.S. 30-year mortgage rate to a 19-month low this week, according to Freddie Mac.
The cut would be the first in more than four years as the Fed focuses on fighting inflation. Across the Atlantic, moves to protect the economy have already begun: The European Central Bank cut interest rates by a quarter percentage point for the second time on Thursday in a bid to support economic growth.
UBS strategists said much of the focus will be on how much the Fed cuts rates in September, but a more important factor is how much total cut the central bank ultimately ends up with, and how much the market has already priced in. Most traders expect cuts of more than 2 percentage points over the course of next year, bringing the federal funds rate from its current range of 5.25% to 5.50%, according to CME Group data.
“Any deviation from this path, whether it be a resurgence in inflation or the risk of a recession, would be difficult for markets to accept,” the strategists, led by Jonathan Golub, said in a statement.
On Wall Street, Kroger Co. rose 7.2 percent after it said its latest quarterly profit beat analysts’ expectations. The grocer’s revenue missed expectations but it raised the lower end of its forecast range for a key earnings measure for the full year.
Alaska Air Group Inc. rose 1.2 percent after raising its summer profit outlook. The airline said a key underlying measure of revenue will probably be higher than a year ago. Fuel costs could also be lower than expected.
American Airlines rose 1 percent after flight attendants voted to ratify their labor contract and avoid a potential strike.
Overall, the S&P 500 rose 41.63 points to 5,595.76, the Dow added 235.06 points to 41,096.77 and the Nasdaq added 174.15 points to 17,569.68.
Overseas stock markets saw indexes rise across most of Europe, while Japan’s Nikkei stood out in Asia, rising 3.4%, clawing back some of its steep losses after a seven-day losing streak.
Cho is a contributing writer for The Associated Press. Associated Press writers Yuri Kageyama and Matt Ott contributed to this report.
