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Financial Markets 06/12 15:31
NEW YORK (AP) -- U.S. stock indexes ticked higher on Thursday following
another encouraging update on inflation across the country.
The S&P 500 rose 0.4% to pull back with 1.6% of its record. The Dow Jones
Industrial Average added 101 points, or 0.2%, and the Nasdaq composite gained
0.2%.
Oracle pushed upward on the market after jumping 13.3%. The tech giant
delivered stronger profit and revenue for the latest quarter than analysts
expected, and CEO Safra Catz said it expects revenue growth "will be
dramatically higher" in its upcoming fiscal year.
That helped offset a 4.8% loss for Boeing after Air India said a
London-bound flight crashed shortly after taking off from Ahmedabad airport
Thursday with 242 passengers and crew onboard. The Boeing 787 Dreamliner
crashed into a residential area near the airport five minutes after taking off.
The cause of the crash wasn't immediately known.
Stocks broadly got some help from easing Treasury yields in the bond market
following the latest update on inflation. Thursday's said inflation at the
wholesale level wasn't as bad last month as economists expected, and it
followed a report on Wednesday saying something similar about the inflation
that U.S. consumers are feeling.
Wall Street took it as a signal that the Federal Reserve will have more
leeway to cut interest rates later this year in order to give the economy a
boost.
The Federal Reserve has been hesitant to lower interest rates, and it's been
on hold this year after cutting at the end of last year, because it's waiting
to see how much President Donald Trump's tariffs will hurt the economy and
raise inflation. While lower rates can goose the economy by encouraging
businesses and households to borrow, they can also accelerate inflation.
The yield on the 10-year Treasury fell to 4.35% from 4.41% late Wednesday
and from roughly 4.80% early this year.
Besides the inflation data, a separate report on jobless claims also helped
to weigh on Treasury yields. It said slightly more U.S. workers applied for
unemployment benefits last week than economists expected, and the total number
remained at the highest level in eight months. That could be an indication of a
rise in layoffs across the country.
"We believe that were it not for the uncertainty caused by the tariffs, the
combined information coming from the inflation and labor-market data would have
compelled the Fed to have resumed cutting its policy rate by now," according to
Thierry Wizman, a strategist at Macquarie.
The Fed's next meeting on interest rates is scheduled for next week, but the
nearly unanimous expectation on Wall Street is that it will stand pat again.
Traders are betting it's likely to begin cutting in September, according to
data from CME Group.
Trump's on-and-off tariffs have raised worries about higher inflation and a
possible recession, which had sent the S&P 500 roughly 20% below its record a
couple months ago. But stocks have since rallied nearly all the way back on
hopes that Trump will lower his tariffs after reaching trade deals with other
countries.
Many of Trump's tariffs are on hold at the moment to give time for
negotiations, but Trump added to the uncertainty late Wednesday when he
suggested the United States could send letters to other countries at some point
"saying this is the deal. You can take it or you can leave it."
On Wall Street, Chime Financial jumped 37.4% in its first day of trading on
the Nasdaq. The technology company is trying to be the main financial hub for
customers, connecting them with its bank partners.
GameStop dropped 22.5% after saying it plans to raise $1.75 billion by
borrowing at zero interest rates, though the lenders could choose to be repaid
in the video-game retailer's stock instead of cash.
All told, the S&P 500 rose 23.02 points to 6,045.26. The Dow Jones
Industrial Average added 101.85 to 42,967.62, and the Nasdaq composite gained
46.61 to 19,662.48.
In stock markets abroad, indexes were mixed across Europe and Asia amid
mostly modest movements. Hong Kong's Hang Seng was an outlier, and it tumbled
1.4% to give back some of its strong recent gains.
Hong Kong's index is still up nearly 20% for the year so far, towering over
the U.S. stock market's gain of less than 3%.
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AP Writers Matt Ott, Elaine Kurtenbach and Seung Min Kim contributed.
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