Wall Street hits record highs as rate cut bets intact after inflation data

Dow Jones Industrial Average rose 599.01 points to 46,087.78, while S&P 500 gained 53.15 points to 6,584.92 and the Nasdaq Composite gained 153.96 points, or 0.70%, to 22,040.02

Wall Street's main indexes hit intraday record highs on Thursday, boosted by gains across sectors, after the latest inflation data did little to alter market expectations of interest rate cuts by the Federal Reserve.

 

U.S. consumer prices rose more than expected in August and the annual increase in inflation was the largest in seven months.

The Fed is widely expected to cut rates by at least 25 basis points next week, a move that was largely priced in after a series of bleak labor market datasets and Wednesday's cooler-than-expected producer inflation reading. 

However, pricing now reflects bets on three straight quarter-point cuts, one at each meeting left this year.

 

In a separate reading, initial jobless claims for the week ended September 6 stood at 263,000, at a near four-year high. 

"Everything that we seem to be getting is another nail in the coffin, suggesting that the Fed will cut in September," said Paul Jackson, global head of asset allocation research at Invesco. 

"The markets are convinced that the Fed is on an easing cycle and that it will be relatively aggressive and continuous in that easing." 

At 11:35 a.m. ET, the Dow Jones Industrial Average rose 599.01 points, or 1.31%, to 46,087.78, the S&P 500 gained 53.15 points, or 0.81%, to 6,584.92 and the Nasdaq Composite gained 153.96 points, or 0.70%, to 22,040.02. 

Most sectors on the S&P 500 were trading higher, with the healthcare sector up 1.5% at a more than four-month high.

Centene advanced 11.5% after the health insurer reaffirmed 

its annual profit forecast and said quality ratings for its Medicare plans were in line with expectations. 

Consumer discretionary stocks also gained 1.5% with electric vehicle maker Tesla the biggest boost, up 4%. 

Micron Technology gained 10% after Citigroup raised its price target on the memory chipmaker to $175 from $150. The Philadelphia SE Semiconductor Index rose 0.9%, up for the sixth straight session. 

Communication services stocks on the benchmark index were outliers, down 0.2%. 

The S&P 500 and the Nasdaq notched record high closes on Wednesday, partly helped by a nearly 36% surge in Oracle after an upbeat forecast that brought the cloud computing company closer to joining the trillion-dollar club. 

It revived the AI trade on Wednesday, sparking a rally in artificial-intelligence-linked chip and utility companies supplying power to data centers. 

Oracle, however, dropped 3% on Thursday. 

Wall Street's three main indexes have had a broadly positive start to September - a month that is deemed bad historically for U.S. equities. In the month, the benchmark S&P 500 has shed 1.5% on average since 2000, data compiled by LSEG showed. 

Among other stocks, chip design software firm Synopsys gained 10% after a near 36% plunge on Wednesday. 

Delta Airlines fell 4%, the biggest decliner on the S&P 500, as the carrier reaffirmed its annual profit forecast. 

Advancing issues outnumbered decliners by a 5.28-to-1 ratio on the NYSE and by a 2.94-to-1 ratio on the Nasdaq. 

The S&P 500 posted 30 new 52-week highs and four new lows, while the Nasdaq Composite recorded 99 new highs and 36 new lows.