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Aug 11 (Reuters) – The S&P 500 traded at its highest level in more than three months on Thursday, extending a rally from the previous session, as fresh evidence of slowing inflation bolstered expectations. hopes for a lower rise in interest rates.
The benchmark (.SPX) rose after data showed US producer prices fell unexpectedly in July, bolstering the odds of a 50 basis point hike by the Federal Reserve in September instead of 75 basis points. Read more
Meanwhile, the number of Americans filing new claims for unemployment benefits rose for the second week in a row, indicating further easing in the labor market despite tough conditions. Read more
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The indices had rebounded strongly on Wednesday after a weaker-than-expected rise in consumer prices. The gains came even as policymakers left no doubt that they would tighten monetary policy until price pressures were completely broken. Read more
“These economic numbers don’t stray too far from the expectation that the economy continues to do well and perhaps inflation is at least somewhat under control,” said Ted Weisberg, founder and chairman of Seaport Securities.
“Markets are eager for good news after what has been a horrific first six months of the year.”
Traders now expect more than a 63.5% chance that the Fed will raise interest rates by 50 basis points. FEDWATCH
Eight of the 11 major S&P 500 indices advanced, with financials (.SPLRCL) and industrials (.SPLRCI) adding nearly 1% each, while energy stocks trailed crude price gains.
Boosting the Dow (.DJI) and S&P 500, Banks (.SPXBK) extended their 1.2% rally with Goldman Sachs (GS.N) and JPMorgan Chase & Co (JPM.N) up 1, 3% and 0.8%, respectively.
As of 12:25 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 155.20 points, or 0.47%, at 33,464.71, the S&P 500 (.SPX) was up 14.82 points, or 0.35%, to 4,225.06, and the Nasdaq Composite (.IXIC) lost 5.68 points, or 0.04%, to 12,849.13.
The tech-heavy Nasdaq (.IXIC) lagged peers as many mega-cap growth and tech stocks reversed early gains as US Treasury yields pared losses.
“Some traders are looking to start taking profits, but clearly the near-term direction is higher, not lower pending additional macro data,” said Michael James, managing director of institutional equity trading at Wedbush Securities.
High-growth stocks that rebounded in the previous session and whose valuations are vulnerable to rising bond yields, such as Tesla Inc (TSLA.O) and Amazon.com Inc (AMZN.O), fell sharply of 1% each as a benchmark 10 the annual return reached 2.83%.
Despite its recent rebound from mid-June lows, the tech-heavy Nasdaq is down 17.8% year-to-date as fears of aggressive monetary policy have sapped appetite for stocks. stocks, especially high growth stocks.
The U.S. central bank has raised its benchmark rate by 225 basis points since March as it struggles to calm demand without triggering a sharp increase in layoffs.
In earnings-focused news, Walt Disney (DIS.N) jumped 5.4% as the media giant edged rival Netflix Inc (NFLX.O) with 221 million streaming customers and announced that would raise prices for customers who want to watch Disney+ or Hulu without ads. Read more
Bumble Inc (BMBL.O) fell 7.9% as it slashed its full-year revenue forecast, hit by war in Ukraine, while struggling with competition from rival Match Group Inc (MTCH .O) in the online dating market. Read more
Advancing issues outnumbered declining issues with a ratio of 2.59 to 1 on the NYSE and 1.57 to 1 on the Nasdaq.
The S&P index recorded four new 52-week highs and 29 new lows, while the Nasdaq recorded 55 new highs and 16 new lows.
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Reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur
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