NEW YORK (AP) — A buying spree on the New York Stock Exchange propelled stocks to their highest level in nearly two months on Thursday, following the latest indication that inflation is continuing to slow.
The S&P 500 rose 1.3% after a report showed wholesale inflation slowed more than expected last month. The Dow Jones industrial average gained more than 383 points, or 1.1%, while the Nasdaq composite jumped 2%.
Thursday’s report showed that prices paid to producers in March were 2.7% higher than a year earlier, the lowest level of inflation in that sector in more than two years. The hope on Wall Street is that the moderation of inflation at the wholesale level will not only help corporate profits, but also translate into lower price increases for consumers. A day earlier, another report indicated that consumer inflation had slowed to 5%.
Inflation and the level to which the Federal Reserve will raise interest rates to control it have been at the center of Wall Street’s concerns for more than a year. The central bank has raised rates at such a feverish pace that it has already slowed parts of the economy and strained the banking system.
Another report released Thursday said the number of workers filing for jobless benefits last week was slightly higher than expected, though the job market has continued to hold up. The weakening of that market could take more pressure off prices. This, coupled with the inflation report, heightened traders’ expectations that the end of the Fed’s rate hike is near.
Some brokers believe the central bank will hold rates steady at its next meeting in May, but most believe there will be one more, albeit modest, hike.
A less aggressive Federal Reserve would help big tech stocks in particular, because high-growth stocks are seen as some of the most vulnerable to rate hikes. Apple gained 3.4% and Amazon 4.7%; both were two of the biggest forces driving the S&P 500.
Treasury yields fell immediately after the weaker-than-expected reports on Thursday before paring their losses and reversing them later in the morning. The 10-year bond yield rose from 3.40% to 3.44%.
The S&P 500 gained 54.27 points to 4,146.22. The Dow rose 383.19 units to settle at 34,029.69 and the Nasdaq advanced 236.93, ending at 12,166.27.
Associated Press writers Joe McDonald and Matt Ott contributed to this report.
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