- U.S. stocks ended mostly higher on Thursday as investors were encouraged by new inflation data.
- The data showed wholesale price inflation was weaker than expected in May, after the previous day’s CPI reading showed consumer price inflation also slowed.
- Tesla shares surged ahead of the results of the vote on Elon Musk’s compensation package, while Broadcom soared after reporting earnings.
U.S. stocks closed modestly higher at another record high on Thursday as investors embraced new inflation data showing prices are cooling, strengthening the case for the Federal Reserve to cut interest rates.
The S&P 500 hit an all-time high for the fourth consecutive day as of Thursday’s close.
Traders received another round of encouraging economic data after the Bureau of Labor Statistics reported that producer price inflation came in weaker than expected in May, falling 0.2% against expectations of a 0.1% increase. This was the biggest monthly decline since October. Producer prices rose at an annualized rate of 2.2%.
On the labor front, jobless claims rose, signaling some easing in the job market as more Americans file for unemployment benefits. The number of people filing for unemployment benefits last week reached a 10-month high of 242,000.
These figures, along with the consumer price index for May released on Wednesday, highlight the weakening economy and increase the likelihood that the Fed will start cutting interest rates in the coming months.
“In essence, the latest data opens up a bit the possibility that the Fed will start cutting rates later this year,” Comerica Bank chief economist Bill Adams said Thursday, adding that the bank expects the first rate cut to come in September, with further cuts to come at the December policy meeting.
Tesla shares soared in trading on Thursday after Elon Musk said he expects shareholders to approve a $56 billion compensation package they’re voting on. Earlier in the day, it was reported that investment giants BlackRock and Vanguard, which own about 13% of Tesla shares, would vote in favor of the compensation agreement.
Meanwhile, Broadcom shares have soared after strong earnings and the announcement of a 10-for-1 stock split, and analysts at Bank of America wrote in a note that the company could be the next to join the $1 trillion club of companies, an elite group that also includes fellow chipmaker Nvidia.
As of the close of trading at 4 p.m. on Thursday, U.S. stock indexes were as follows:
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