U.S. Stocks Rally as CPI Data Strengthens Fed Rate Cut Expectations
U.S. stocks moved higher on Thursday after inflation data showed consumer prices rising largely in line with forecasts, reinforcing expectations that the Federal Reserve will cut interest rates next week.
At 09:35 ET (13:35 GMT), the Dow Jones Industrial Average gained 170 points (+0.4%), the S&P 500 rose 23 points (+0.4%), and the NASDAQ Composite climbed 90 points (+0.4%).
CPI Signals Rate Cut Ahead
The CPI report showed prices rising 2.9% year-over-year in August, compared with 2.7% in July and matching economists’ forecasts. On a monthly basis, inflation rose 0.4%, slightly above the 0.3% estimate. This came after Wednesday’s Producer Price Index (PPI) showed weaker-than-expected results, signaling easing wholesale price pressures.
Job market data also supported the case for a cut. Weekly jobless claims rose by 27,000 to 263,000, suggesting labor market conditions are cooling. Markets now expect the Fed to begin a rate-cut cycle, likely starting with a 25-basis-point reduction at the September 17 meeting.
Meanwhile, the European Central Bank (ECB) kept borrowing costs unchanged earlier in the session, as expected.
Corporate Highlights
Adobe Systems (NASDAQ: ADBE) headlines the earnings calendar, set to report results after the closing bell. Despite raising its annual guidance in June, analysts warn the company faces ongoing cyclical and structural challenges.
Elsewhere, Kroger (NYSE: KR) stock rose after the grocery giant lifted its annual sales forecast, citing steady demand for lower-priced products amid tariff-related pressures on consumers.
Oil Prices Slip on Weak Demand
Crude prices fell on Thursday as signs of weaker U.S. demand overshadowed recent gains driven by geopolitical risks in Russia and the Middle East.
By 09:35 ET, Brent crude was down 1.7% at $66.35 a barrel, while West Texas Intermediate (WTI) slipped 1.8% to $62.50. U.S. crude inventories increased by 3.9 million barrels last week, against expectations for a 1 million-barrel draw. Gasoline stocks also rose by 1.5 million barrels, defying forecasts for a small decline.
The build-up in inventories and concerns about slowing U.S. economic growth are fueling worries that demand from the world’s largest oil consumer could weaken further this year.
