US markets close higher on optimism on inflation
US stocks rose again and global equities hit new highs for the year on Thursday, as slowing US inflation stoked bets that the Federal Reserve will pause rate hikes after this month. Wall Street's main stock indexes built on the previous session's sharp gains after data showed that consumer prices rose modestly in June, registering the smallest annual increase in more than two years.US stocks rose again and global equities hit new highs for the year on Thursday, as slowing US inflation stoked bets that the Federal Reserve will pause rate hikes after this month. Wall Street's main stock indexes built on the previous session's sharp gains after data showed that consumer prices rose modestly in June, registering the smallest annual increase in more than two years. Other data on Thursday showed that US producer prices barely rose in June, US jobless claims unexpectedly declined, and Chinese exports dropped. The Dow Jones Industrial Average rose 0.1 percent to 34,394, the S&P 500 gained 0.9 percent to 4,509 and the Nasdaq Composite added 1.6 percent to 14,138. Bets that the Federal Reserve could soon end its monetary tightening campaign sent the dollar to its lowest level since April 2022 and pushed the yield on 10-year US Treasury notes to near a two-week low. Interest rate futures showed markets have fully priced in another rate hike from the Fed at its upcoming meeting later this month, but expectations of further increases this year have faded. Market strategists at Citigroup said in a note on Thursday that slower job growth and softer-than-expected core consumer prices "finally lend some support to the Fed’s preferred narrative that supply and demand are coming into balance, allowing inflation to cool." The International Monetary Fund said on Thursday that first-quarter global growth slightly outpaced projections in its April forecasts, but data since then has shown a mixed picture, with "pockets of resilience" alongside signs of slowing momentum. "The market is expecting that the Fed is going to hike interest rates one more time," BMO Wealth Management’s chief investment officer, Yung-Yu Ma, said in an email. "But the market does expect that that's probably where the Fed is going to stop for the rest of the year." "We've been thinking that the Fed's going to level off around a low 5 percent range and stay there for some time," Ma added. (Reuters) Other data on Thursday showed that US producer prices barely rose in June, US jobless claims unexpectedly declined, and Chinese exports dropped. The Dow Jones Industrial Average rose 0.1 percent to 34,395, the S&P 500 gained 0.8 percent to 4,510 and the Nasdaq Composite added 1.6 percent to 14,138. Bets that the Federal Reserve could soon end its monetary tightening campaign sent the dollar to its lowest level since April 2022 and pushed the yield on 10-year US Treasury notes to near a two-week low. Interest rate futures showed markets have fully priced in another rate hike from the Fed at its upcoming meeting later this month, but expectations of further increases this year have faded. Market strategists at Citigroup said in a note on Thursday that slower job growth and softer-than-expected core consumer prices "finally lend some support to the Fed’s preferred narrative that supply and demand are coming into balance, allowing inflation to cool." The International Monetary Fund said on Thursday that first-quarter global growth slightly outpaced projections in its April forecasts, but data since then has shown a mixed picture, with "pockets of resilience" alongside signs of slowing momentum. "The market is expecting that the Fed is going to hike interest rates one more time," BMO Wealth Management’s chief investment officer, Yung-Yu Ma, said in an email. "But the market does expect that that's probably where the Fed is going to stop for the rest of the year." "We've been thinking that the Fed's going to level off around a low 5% range and stay there for some time," Ma added. (Reuters)