Stocks hovered near record levels on Wall Street as wholesale inflation slightly exceeded expectations. The S&P 500 edged up 0.2% on Thursday, with the Dow gaining 115 points and the Nasdaq rising 0.1%. Treasury yields inched higher after a report indicated that inflation at the wholesale level last month was slightly higher than anticipated. This follows a series of higher-than-expected inflation reports, which have dampened earlier hopes for interest rate cuts by the Federal Reserve this month. Other economic indicators showed some softening in the economy.
In early trading on Thursday, futures for the Dow Jones Industrial Average jumped 0.4%, while futures for the S&P 500 added 0.3%.
Economists anticipated a rebound in retail sales in February, following a 0.8% decline in January attributed in part to adverse weather conditions. Many economists suggested that consumers are feeling the pinch of higher interest rates and are tightening their spending habits. Analysts forecasted a 0.7% growth in retail sales last month.
Retail sales are closely monitored by economists as consumer spending accounts for over two-thirds of U.S. economic activity. The Federal Reserve, which is not expected to begin reducing its benchmark interest rate until at least June, also closely watches these reports in its efforts to combat inflation. The Fed has raised its benchmark borrowing rate to its highest level in over two decades.
Oil prices have been on the rise this year, contributing to higher-than-expected inflation. This has dashed hopes on Wall Street for interest rate cuts by the Federal Reserve at its upcoming meeting next week.
Despite the current inflationary pressures, the expectation remains for the Fed to start cutting rates in June, as the longer-term trend for inflation appears to be downward. The Fed’s main interest rate is currently at its highest level since 2001, and reductions would help alleviate pressure on the economy and financial system.
In premarket trading, shares of U.S. Steel fell 4.7% as President Joe Biden is expected to formally oppose the planned sale of U.S. Steel to Nippon Steel of Japan. Nippon Steel announced its intention to acquire the Pittsburgh-based steel producer for $14.1 billion in cash in December, raising concerns about its impact on unionized workers, supply chains, and U.S. national security.
Shares of Anheuser-Busch InBev declined 3.6% after Altria announced it was selling a portion of its stake in the company. Altria is offering 35 million of its 197 million ABI shares.
In Europe, France’s CAC 40 rose 0.8%, Germany’s DAX gained 0.4%, and Britain’s FTSE 100 remained largely unchanged.
In Asia, Japan’s Nikkei 225 reversed earlier losses to close up 0.3%, with Nissan Motor Co. stock jumping 2.2% on unconfirmed reports of an agreement with Honda Motor Co. on electric vehicles. Honda shares rose 1.1%.
In energy trading, benchmark U.S. crude rose 70 cents to $80.42 a barrel, while Brent crude, the international standard, increased 60 cents to $84.63 a barrel.
The U.S. dollar was relatively flat against the Japanese yen, trading at 147.73 yen, and the euro cost $1.0940, down from $1.0953.
On Wednesday, the S&P 500 dipped 0.2% after reaching an all-time high, while the Dow Jones Industrial Average gained 0.1% and the Nasdaq composite fell 0.5%.
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