S&P 500 Pauses as Hot Inflation Data Tempers Rate-Cut Hopes
The S&P 500 eased on Thursday after recent record highs, as hotter-than-expected inflation data cooled expectations for a Federal Reserve rate cut in September and reignited concerns over tariff-driven price pressures.
By 12:53 p.m. ET (16:53 GMT), the Dow Jones Industrial Average was down 183 points, or 0.4%. The S&P 500 slipped 0.1%, while the Nasdaq Composite was little changed.
Producer Prices Jump in July
U.S. producer price index (PPI) data released Thursday showed stronger-than-forecast inflation at the wholesale level.
The PPI for final demand rose 0.9% in July from the prior month, the fastest pace since February, after remaining unchanged in June. On a 12-month basis, PPI climbed 3.3%, up from 2.4% in June. Economists had expected smaller gains of 0.2% monthly and 2.5% annually.
According to Stifel Economics, the hotter PPI reading was driven largely by a 1.1% surge in services costs, the biggest monthly jump since March 2022. Following the report, market odds for a September Fed rate cut dipped to 90%, down from 97% the previous day.
Labor Market Remains Resilient
Jobless claims data showed initial filings for unemployment benefits fell by 3,000 to a seasonally adjusted 224,000 for the week ending August 9, reflecting continued low levels of layoffs.
Corporate Movers
- Deere & Company (NYSE:DE) fell after narrowing its full-year profit outlook, citing ongoing market headwinds.
- Tapestry (NYSE:TPR) dropped as its fiscal-year income forecast disappointed Wall Street.
- Birkenstock (NYSE:BIRK) rose after beating fiscal Q3 profit expectations and reaffirming its full-year guidance, despite headwinds from higher U.S. tariffs on EU goods.
- Cisco Systems (NASDAQ:CSCO) slipped even after issuing a stronger-than-expected Q1 revenue outlook, as it reported tariff-related impacts during its last fiscal year.
