Key Points
- U.S. stocks are pausing near record highs after a strong recent rally.
- The rally is driven by strong expectations of a Federal Reserve interest rate cut in September.
- Investors are now watching new inflation data to see the impact of recent tariffs.
- Some analysts are warning that inflation could rise to 4% in the coming months.
U.S. stocks hovered near the flatline Thursday morning, taking a breather after a strong rally that sent the S&P 500 and Nasdaq to new all-time highs. Investors are now waiting for new economic data to get a clearer picture of the economy’s health.
At 7:00 AM (ET), the S&P 500 was at 6,466.59 USD, marking a gain of 0.32%. The Nasdaq 100 is edging up by 0.04% to 23,849.04 USD. Meanwhile, the Dow Jones Industrial Average (Dow 30) saw the strongest performance, rising 1.04% to 44,922.28 USD.
The recent rally has been fueled by growing expectations that the Federal Reserve will cut interest rates at its next meeting in September. Recent data has shown inflation to be relatively tame and the labor market to be cooling, which investors believe will push the Fed to act.
The market is now pricing in a nearly 95% chance of a September rate cut. Treasury Secretary Scott Bessent even suggested that a more aggressive half-point cut could be on the table.
Today, all eyes are on the latest producer price index (PPI) data, which measures inflation at the wholesale level. This will give investors a sense of whether the recent U.S. tariffs are starting to push up costs. ING analysts expect core PPI to rise to 3% and warned that it could easily hit 4% in the coming months, a trend that could worry long-term investors.
In company news, Cisco shares fell after the company noted some impact from U.S. tariffs. At the same time, agricultural giant Deere is set to report its earnings.
Oil prices edged higher, bouncing back from a two-month low. The market is looking ahead to a meeting on Friday between President Trump and Russian President Vladimir Putin to discuss a potential end to the war in Ukraine. This event could have major implications for the energy markets.
