NEW YORK (AFP) – A rally in US stocks petered out Thursday (Aug 11), with markets ending mixed as analysts weighed encouraging inflation news against expectations that the Federal Reserve will continue to raise interest rates.
Americans received a much-welcomed sign that some inflation relief is in store early in the day when a Labour Department report showed that wholesale prices cooled sharply in July.
The producer price index (PPI) fell 0.5 per cent compared to June, on a nine percent drop in energy prices.
The news came just a day after data showed consumer price inflation also slowed last month, pulling back from a 40-year high that has left many families struggling to make ends meet.
The widely anticipated CPI report prompted a Wall Street rally that carried over into Thursday. But the upward momentum had mostly ebbed by the session’s close.
“The market is sending a signal that the Fed is going to continue to raise rates, but the question mark is will they be aggressive, overly aggressive or will they continue on the path of the unknown?” said Peter Cardillo of Spartan Capital.
The broad-based S&P 500 closed down 0.1 per cent at 4,207.27.
But the Dow Jones Industrial rose 0.1 per cent to end the day at 33,336.67, while the tech-rich Nasdaq Composite Index dropped 0.6 per cent to end at 12,779.91.
While “the market has been on a tear,” eventually the “reality does settle in” that the Fed will continue to lift interest rates based on persistently high inflation, said Patrick O’Hare of Briefing.com.
As for individual stocks, news that activist investor ValueAct Capital Partners has taken a 6.7 per cent stake in The New York Times lifted shares of the newspaper company by 10.6 per cent.
Disney, meanwhile, was up 4.7 per cent after reporting better-than-expected quarterly earnings, as well as a leap in paying subscribers for its streaming service.