NEW YORK (AP) — On a calm Wednesday, U.S. stocks increased somewhat as the most recent inflation report was nearly exactly what analysts had predicted.
Following one of its finest days of the year, the S&P 500 increased by 0.4% to close within 3.7% of its all-time high established last month. For the first time in almost two weeks, the Dow Jones Industrial Average closed the day above the 40,000 mark after rising 242 points, or 0.6%. The gain on the Nasdaq composite was less than 0.1%.
In the bond market, Treasury rates were largely stable following the announcement by the US government that the cost of food, lodging, gasoline, and other items was 2.9% higher last month for consumers than it was a year ago.
Wall Street has been anticipating the Federal Reserve’s decision to lower its main interest rate at its September meeting, and the data should keep it on course. In an effort to curb inflation, which peaked at 9% two years ago, the Fed has been maintaining rates at historically high levels. Reducing interest rates would relieve pressure on the economy and investment prices.
The consumer inflation report on Wednesday was not as good as the wholesale inflation update from the previous day, but Chris Larkin, managing director of trading and investment at E-Trade from Morgan Stanley, says it probably doesn’t alter anything.
He stated that the Fed might make more dramatic cuts if the majority of evidence over the coming weeks indicates a deteriorating economy. The amount that American consumers spend at stores will be the subject of a report that is released on Thursday.
Concerns concerning the economy’s strength have surfaced following a somewhat worse-than-expected month of hiring by U.S. firms in July, even though the economy is still expanding and many economists believe a recession is improbable.
The yield on the 10-year Treasury eased to 3.83% from 3.85% late Tuesday. It’s been coming down since topping 4.70% in April, as expectations have built for coming cuts to interest rates.
The two-year Treasury yield, which more closely tracks expectations for the Fed, edged up to 3.95% from 3.94% late Tuesday, as traders weigh whether September’s anticipated cut will be the traditional or jumbo-sized move.
Wall Street saw a 7.8% increase in Kellanova following Mars’ announcement that it would acquire the business that makes Kellogg’s, Pringles, and Cheez-Its for $83.50 in cash per share. The firms estimate that the acquisition is worth $35.9 billion in total, including debt. When Kellogg Co. divided into three businesses in the summer of 2022, Kellanova was born.
Cardinal Health rose 3.7% after joining the parade of companies that have reported stronger profit for the spring than analysts expected.
On the losing end was Brinker International, the company behind Chili’s and Maggiano’s restaurants. It fell 10.7% after reporting weaker profit for the latest quarter than expected. That was despite strengthening sales trends at Chili’s, which got a boost from higher prices, increased traffic and the launch of its “Big Smasher” burger. Expectations were high coming into the report for Brinker International, whose stock is still up 45.6% for the year so far.
After announcing that it had enticed Brian Niccol away from Chipotle Mexican Grill to become its CEO, Starbucks saw a 2.1% decline, giving up some of its significant gain from the day before.
The S&P 500 increased by 20.78 points overall to 5,455.21. The Nasdaq composite increased 4.99 to 17.192.60, while the Dow gained 242.75 to 40,008.39.
Indexes on foreign stock markets showed some moderate increases in most of Europe and mixed results in Asia.
The Nikkei 225 in Japan, which has had the most volatile trading in recent weeks, increased by 0.6% after a day of ups and downs. Fumio Kishida, Japan’s troubled prime minister, shocked the nation on Wednesday by declaring he will resign when his party chooses a new leader the next month.