Wall Street surged to fresh records on Thursday (Friday AEST) as investors brushed off stronger-than-expected inflation data and kept bets intact that the Federal Reserve will move ahead with an interest rate cut next week.
The Dow Jones Industrial Average rallied 617.1 points, or 1.4%, to close at 46,108.0. The S&P 500 advanced 55.5 points, or 0.9%, to 6,587.5, while the Nasdaq Composite added 157.0 points, or 0.7%, to end at 22,043.1.
All three major United States benchmarks set new intraday highs and finished the session at record levels.
The Bureau of Labor Statistics reported that the consumer price index rose 0.4% in August, above forecasts of 0.3%.
On an annual basis, CPI came in at 2.9%, matching expectations.
Core CPI, which strips out food and energy, increased 0.3% for the month and 3.1% year-on-year, in line with estimates.
The figures followed Wednesday’s producer price index report, which showed a surprise monthly decline of 0.1%, easing some inflation concerns.
Labour market data pointed to rising joblessness, with weekly unemployment claims increasing by 27,000 to 263,000 for the week ending September 6. That marked the highest level since October 2021 and came in above estimates of 235,000.
Bond markets rallied alongside equities. The yield on the benchmark 10-year Treasury note dropped 0.5% to 4.026%, while the 2-year yield was steady at 3.544%.
Despite the hotter inflation print, traders remained confident the Fed will cut rates at its upcoming policy meeting, with markets largely interpreting the broader data backdrop as supportive of a looser monetary stance.
According to the CME Group FedWatch Tool, markets are pricing in a 93.9% chance of a 25 basis point cut, and a 6.1% chance of a larger, 50 basis point cut.
