- U.S. stocks rose to record levels after inflation slowed more than expected in June.
- The 10-year Treasury yield fell as investors focused on a clearer path for the Fed to cut interest rates.
- While the chances of a rate cut at the July policy meeting have increased, a September cut remains the most likely.
U.S. stocks edged higher on Thursday after the June Consumer Price Index report showed inflation slowed more than expected last month.
The S&P 500 and Nasdaq were hovering near all-time highs. The 10-year Treasury yield fell 9 basis points to 4.181%, while the 2-year Treasury note fell 14 basis points to 4.49%.
Last month, the CPI increased 3% year-over-year, versus expectations of a 3% increase. Month-over-month, the CPI decreased 0.1%, versus expectations of a 0.1% increase.
Falling gasoline prices supported the overall index, while soaring housing costs also showed signs of easing, posting the slowest rate of growth since 2022.
The numbers should help pave the way for the Fed to begin cutting interest rates. The lower Consumer Price Index (CPI) report slightly increased the likelihood of a rate cut at this month’s policy meeting, but a September cut remains the most likely outcome. Investors see a roughly 80% chance of a September rate cut, according to the CME FedWatch tool, raising the odds of another cut at the November or December meeting.
“The latest inflation data puts the Fed firmly on track for a rate cut in September,” said Seema Shah, chief global strategist at Principal Asset Management in New York. “The smallest increase in core CPI since 2021 has the Fed confident that the first-quarter CPI surge was temporary, providing momentum for multiple rate cuts this year.”
Below are U.S. stock indexes as of the start of trading at 9:30 a.m. on Wednesday.
Here’s something else that happened today:
Commodities, Bonds and Cryptocurrencies:
- Oil futures rose. West Texas Intermediate crude rose 0.2% to $82.30 a barrel. Brent crude, the international benchmark, rose 0.2% to $85.26 a barrel.
- Gold rose 1.3% to $2,411 an ounce.
- The yield on the 10-year Treasury note fell 9 basis points to 4.181%.
- Bitcoin rose 1.3% to $58,014.
