U.S. stocks closed on a positive note on Thursday, led by tech-related momentum stocks, as investors found reassurance in fresh economic data suggesting that inflation may be cooling down. The Nasdaq, particularly sensitive to interest rate movements, saw significant gains, while the S&P 500 also ended the day in positive territory. The Dow, however, closed essentially unchanged.
The release of the Producer Prices Index (PPI) provided some relief, coming in softer than expected and indicating that price growth may still be moderating. Brian Nick, senior investment strategist at Macro Institute, noted that this data offered a more optimistic outlook compared to the previous day’s Consumer Prices Index (CPI) report, which had sparked a sharp market downturn and raised concerns about potential rate hikes by the Federal Reserve.
Following Wednesday’s CPI data, which suggested higher inflationary pressures, there was speculation that the Fed might implement multiple rate cuts by year-end. However, the more favorable PPI numbers alleviated some of these concerns and contributed to a rebound in the market.
Despite the encouraging PPI data, some policymakers, like New York Fed President John Williams and Richmond Fed President Thomas Barkin, expressed caution about adjusting monetary policy too hastily. This sentiment suggests that the Fed may maintain its current stance and wait for more conclusive evidence of sustained easing in pricing pressures.
With the focus now shifting to first-quarter earnings season, investors are awaiting reports from major U.S. banks, including JPMorgan Chase & Co, Citigroup Inc, and Wells Fargo & Co, scheduled for Friday morning.
In Thursday’s trading session, the Dow Jones Industrial Average closed marginally lower, while the S&P 500 and the Nasdaq Composite posted gains.
Tech stocks led the market higher, with the FANG+ index of megacap momentum stocks standing out as a top performer. However, financial shares lagged behind.
Some individual stocks experienced notable movements, such as CarMax, which slid after missing fourth-quarter estimates, and Globe Life, which plummeted following allegations of insurance fraud by a short-seller.
On the other hand, Rent the Runway saw a significant surge after announcing its focus on leveraging artificial intelligence for growth, while biotech firm Alpine Immune Sciences surged on news of its acquisition by Vertex Pharmaceuticals.
Overall, advancing issues slightly outnumbered declining ones, with the S&P 500 and Nasdaq recording new highs. Trading volume on U.S. exchanges was slightly below the recent average.