Stocks rose on Thursday as investors continued to shake off a tough start to September and bought the dip in tech stocks in anticipation of a rate cut by the Federal Reserve next week.
The S&P 500 gained 0.75% to close at 5,595.76, marking its fourth winning day. The Dow Jones Industrial Average added 235.06 points, or 0.58%, to end at 41,096.77. The Nasdaq Composite added 1%, closing at 17,569.68.
The S&P 500 has cut its September losses to just 0.9% and sits just about 1.3% from a new record.
Shares of megacap tech and semiconductor names continued to rally on Thursday, boosting the market during afternoon trading. Artificial intelligence powerhouse Nvidia jumped 1.9%, while Alphabet and Facebook parent Meta Platforms each gained more than 2%.
Inflation data released this week served as the final data points ahead of the Federal Reserve’s Sept. 17-18 meeting, where central bankers are widely expected to announce a quarter-percentage-point interest rate cut.
Thursday’s producer price index, which measures the average change in prices businesses receive for their goods and services, reflected a 0.2% rise in wholesale prices in August. That is in line with expectations. The PPI report follows consumer inflation data released Wednesday that indicated an uptick in core prices, but also that inflation in August declined to its lowest level since February 2021.
Weekly jobless claims data released Thursday also reflected a marginal increase in the number of individuals filing for unemployment benefits, rising to 230,000 for the week ending Sept. 7.
Investors are coming off a choppy trading session that was initially weighed down by the consumer price index report before it saw a late-day advance in tech shares that helped the major benchmarks rebound from their lows.
“Generally, folks are in wait-and-see mode ahead of the Fed next week,” Edward Jones senior investment strategist Mona Mahajan said, noting that markets have been volatile amid a seasonally weaker September and that she still expects “cooling, but not collapsing” economic growth.
“We think this choppiness could continue,” Mahajan continued. “But if we are in this backdrop where the Fed is cutting rates and inflation is moderating gradually — and we can pull off a soft landing — then, historically, markets should continue to perform well in that backdrop. For us, that remains the base case.”
Correction: An earlier version misstated the likelihood of a 50-basis-point rate cut.
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