Wall Street faced a downward trend on Thursday after a concerning report revealed higher-than-expected inflation rates at the U.S. wholesale level. Despite this, stocks from major tech companies like Amazon helped soften the blow.
In the S&P 500, 70% of stocks dipped. Still, the index managed to inch up slightly, reaching a new all-time high. The Dow Jones saw minimal change, dropping just 11 points, while the Nasdaq also declined slightly from its previous record.
The inflation report showed a 3.3% increase in wholesale prices compared to the previous year—significantly higher than the 2.5% forecast from economists. This raise might lead to further inflation for consumers down the line.
As a result of this data, traders reconsidered their earlier belief that the Federal Reserve would likely cut interest rates in September. Lower rates can stimulate the economy but also risk further inflation. Chris Larkin, an expert from E-Trade, noted, “This doesn’t slam the door on a September rate cut, but it may raise some doubt.”
Currently, there’s a 7.4% chance the Fed will maintain rates, a shift from a 100% expectation for a cut just a day earlier. Rising interest rates can hinder businesses, especially smaller ones that often rely on borrowing for growth. The Russell 2000 index, which tracks smaller companies, fell by 1.2%.
This disappointing update followed a previously optimistic consumer pricing report earlier in the week. However, fewer workers applied for unemployment benefits, indicating a steady job market, which could dissuade the Fed from cutting rates any time soon.
In the bond market, Treasury yields rose. The 10-year Treasury yield increased from 4.20% to 4.28% following the inflation report.
On a less favorable note, Tapestry, the company behind brands like Coach and Kate Spade, reported significant losses due to tariffs. Its stock plummeted by 15.7% despite a positive profit report for the quarter. Deere also saw a drop of 6.8% after it revised its profit forecast downwards, citing cautious customer sentiment.
Conversely, Fossil Group saw its stock surge by 29.8% after exceeding profit expectations and announcing new financial strategies. Amazon’s stock rose by 2.9% as the company expanded its same-day grocery delivery service, which was a key driver of its market performance.
In summary, the S&P 500 closed at 6,468.54 points, even with a slight increase, while the Dow and Nasdaq ended down. Globally, market reactions varied, with mixed results across Asia and Europe, as all eyes turn to the upcoming meeting between President Trump and President Putin.
For further insights, you can read more on economic impacts from the Federal Reserve in this [report](https://www.federalreserve.gov/). Such fluctuations in the market offer a reminder of the interconnectedness of global economies and the uncertainties that come with them.
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Amazon.com, Inc., Stocks and bonds, Financial markets, Vladimir Putin, Inflation, Federal Reserve System, General news, Business, World news, Morgan Stanley, CME Group, Inc., Fossil Group, Inc., Chris Larkin, Economic indicators, Asia, Economic policy, World News
