© Reuters. FILE PHOTO: Traders work at the New York Stock Exchange (NYSE) in New York City, US, July 7, 2023. REUTERS/Brendan McDiarmid
Written by Caroline Valtkevich
NEW YORK (Reuters) – U.S. stocks extended their recent gains to end higher on Thursday, with the Nasdaq rising more than 1% for the second day in a row, as data showed that the annual increase in U.S. producer inflation was the smallest in nearly three years.
The data provided further evidence that inflation pressures were easing. The Consumer Price Index report on Wednesday showed that US consumer prices posted their smallest annual increase in more than two years.
The reports helped support the view that the Federal Reserve will stop raising interest rates after an expected 25 basis point increase later this month.
“The producer price index is another confirmation this week that inflation continues to trend in the right direction even as we see better data for the labor market and consumers in general. This is a good sign,” said Mona Mahajan, chief investment strategist at Edward Jones.
In the twelve months through June, the producer price index increased by 0.1%. This was the smallest year-over-year gain since August 2020 and followed a 0.9% increase in May.
Technology-related stocks provided the most support, and the index of technology-focused stocks including megacaps gained 2.7% and posted a record close.
The index rose 47.71 points, or 0.14%, to 34,395.14 points, and the Standard & Poor’s 500 rose 37.88 points, or 0.85%, to 4,510.04 points, and added 219.61 points, or 1.58%, to 14,138.57.
US chip stocks were also higher, with Nvidia (NASDAQ:) jumping to a record high during the session and Philadelphia Semiconductor rising 2%.
In lieu of some upbeat tone for the day, a separate report showed that weekly jobless claims unexpectedly fell last week, indicating that the job market remains tight.
Focus also turns to the second-quarter earnings season in the US, which begins this week. Shares of JPMorgan Chase (NYSE: NYSE) closed up 0.5% ahead of its quarterly results due before the opening bell on Friday.
Alan Lancz, President, Alan B. Lancz & Associates Inc. In Toledo, Ohio: “We may have another quarter here where the positive sentiment will continue.”
“As long as the outlook and guidance are aligned, that’s what a lot of institutional investors will be looking at.”
Delta Air Lines (NYSE:) closed near flat after rising on news that it raised its full-year earnings forecast, citing a relentless post-pandemic travel boom.
Shares of PepsiCo (NASDAQ::) jumped 2.4% after the company raised its annual revenue and earnings forecasts for the second time.
Other gainers of the day included Google subsidiary Alphabet (NASDAQ:) Inc, up 4.7%. It said it was rolling out its AI chatbot Bard in Europe and Brazil, alleviating concerns about overseas regulatory issues.
Strategists said the recent weakness in the US dollar could be among the positives for US multinationals for future earnings.
Trading volume on US exchanges reached 10.82 billion shares, compared to an average of 11.11 billion for the full session over the last 20 trading days.
Advance issues outnumbered declining issues on the NYSE by a ratio of 2.90 to 1; On the Nasdaq, the ratio is 1.93 to 1 in favor of advanced traders.
The S&P 500 posted 51 new 52-week highs and 51 new lows. The Nasdaq Composite Index posted 135 new highs and 39 new lows.