The major U.S. index futures are currently pointing to a roughly
flat open on Thursday, with stocks likely to show a lack of
direction after surging to record highs in the previous
session.
Traders may pause to assess the outlook for the markets
following yesterday’s rally, which came as consumer prices rose by
less than expected in the month of April.
The data added to recently renewed optimism about the Federal
Reserve cutting interest rates in the coming months.
Potentially adding to the interest rate optimism, the Labor
Department released a report this morning showing a pullback by
initial jobless claims in the week ended May 11th.
The Labor Department said initial jobless claims slid to
222,000, a decrease of 10,000 from the previous week’s revised
level of 232,000.
Economists had expected jobless claims to fall to 220,000 from
the 231,000 originally reported for the previous week.
However, the positive sentiment may be partly offset by a
separate Labor Department report showing U.S. import prices jumped
by much more than expected in the month of April.
The report said import prices shot up by 0.9 percent in April
after climbing by an upwardly revised 0.6 percent in March.
Economists had expected import prices to rise by 0.3 percent
compared to the 0.4 percent increase originally reported for the
previous month.
The annual rate of growth by import prices accelerated to 1.1
percent in April from 0.4 percent in March, reflecting the largest
over-the-year increase since December 2022.
The Labor Department also said export prices climbed by 0.5
percent after inching up by a downwardly revised 0.1 percent in
March.
Economists had expected export prices to climb by 0.4 percent
compared to the 0.3 percent rise originally reported for the
previous month.
Compared to the same month a year ago, export prices fell by 1.0
percent in April after tumbling by 1.4 percent in March.
With traders reacting positively to closely watched consumer
price inflation data, stocks moved sharply higher during trading on
Wednesday. The major averages added to Tuesday’s gains, setting new
record closing highs.
The major averages saw further upside late in the session,
reaching new highs for the day. The tech-heavy Nasdaq surged 231.21
points or 1.4 percent to 16,742.39, the S&P 500 shot up 61.47
points or 1.2 percent to 5,308.15 and the Dow jumped 349.89 points
or 0.9 percent to 39,908.00.
The rally on Wall Street came following the release of a Labor
Department report showing consumer prices in the U.S. rose by
slightly less than expected in the month of April.
The Labor Department said its consumer price index increased by
0.3 percent in April after rising by 0.4 percent in March.
Economists had expected consumer prices to climb by another 0.4
percent.
Excluding food and energy prices, core consumer prices still
rose by 0.3 percent in April after climbing by 0.4 percent in
March. The increase in core prices matched economist estimates.
The report also said the annual rate of consumer price growth
slowed to 3.4 percent in April from 3.5 percent in March, in line
with expectations.
The annual rate of core consumer price growth decelerated to 3.6
percent in April from 3.8 percent in March. The slowdown also
matched estimates.
Following yesterday’s hotter-than-expected producer price
inflation data, the report added to recently renewed optimism about
the outlook for interest rates.
“The CPI print offered a modicum of hope that inflation is
cooling, albeit slowly,” said Quincy Krosby, Chief Global
Strategist for LPL Financial.
She added, “The Fed will certainly need a series of cooler
reports for adjusting its rate easing timetable, but the CPI report
suggests that the path towards 2% is a bit less bumpy.”
Meanwhile, the Commerce Department released a separate report
showing retail sales in the U.S. unexpectedly came in flat in the
month of April.
The Commerce Department said retail sales were virtually
unchanged in April after climbing by a downwardly revised 0.6
percent in March.
Economists had expected retail sales to rise by 0.4 percent
compared to the 0.7 percent increase originally reported for the
previous month.
Excluding sales by motor vehicle and parts dealers, retail sales
edged up by 0.2 percent in April after jumping by 0.9 percent in
March. The uptick matched economist estimates.
Computer hardware stocks saw substantial strength on the day,
driving the NYSE Arca Computer Hardware Index up by 4.1 percent to
a record closing high.
Shares of Dell (NYSE:DELL) soared after Morgan Stanley raised
its price target on the computer maker’s stock to $152 from $128,
calling it the “best way to play” the AI infrastructure
build-out.
Significant strength was also visible among housing stocks, as
reflected by the 3.4 percent surge by the Philadelphia Housing
Sector Index.
The index reached its best closing level in over a month even
though a report from the National Association of Home Builders
showed an unexpected slump by homebuilder confidence in May.
Semiconductor stocks also moved sharply higher over the course
of the session, with the Philadelphia Semiconductor Index jumping
by 2.9 percent to a two-month closing high.
Software, brokerage and commercial real estate stocks also saw
considerable strength, while airline stocks were among the few
groups that bucked the uptrend.
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