US Stocks Higher After More Cooling Inflation Factors

NEW YORK (AP) -- Wall Street is rallying again Thursday after another encouraging dose of data showed inflation cooled last month.

The S&P 500 was 1% higher following a report showing inflation at the wholesale level slowed more than economists expected in July. It bolstered hopes that inflation may be close to a peak and that the Federal Reserve won't be as aggressive about raising interest rates as feared.

Treasury yields fell, as traders continued to pare back bets for how big the Fed's next rate hike will be. Cryptocurrencies also climbed in another echo of Wednesday's trading, when relief flowed through markets after a report showed inflation at the consumer level cooled by more than expected. But the day's movements were generally less forceful than Wednesday's.

The Dow Jones Industrial Average was up 295 points, or 0.9%, at 33,603, as of 10:13 a.m. Eastern time, and the Nasdaq composite was 1.1% higher.

Inflation is still painfully high, of course, and the economy has given false signals before that relief was on the way only for the rug to get pulled out from underneath investors. But enough hope for a peak has built that the S&P 500 has more than halved its losses from earlier in the year, and it's up roughly 16% from a bottom in mid-June.

Thursday's encouraging signal on inflation helped drive a broad-based rally, and nearly 90% of the stocks in the index were rising.

The Walt Disney Co. jumped 7.9% for the biggest gain in the index after the entertainment company reported stronger profit for the spring than analysts expected. Other media companies also rallied, with Paramount Global up 5.9% and Warner Bros. Discovery up 5.7%.

Companies whose profits most depend on a strong economy were helping to lead the way. Energy stocks as a group within the S&P 500 rose 1.6%. So did the financial companies in the index.

Worries about a possible recession are still looming over the market, as the Federal Reserve continues to raise interest rates to fight inflation. Such increases slow the economy by design, and some parts of the economy have already weakened under their weight, including the housing industry. But a resilient jobs market has offered a strong counterweight, leading to a muddied outlook for the economy.

A report on Thursday showed fewer U.S. workers filed for jobless claims last week than expected, a potentially encouraging sign about layoffs. But it was nevertheless the highest number since November.

In markets overseas, European indexes were mixed, while Asian markets were mostly higher.

In Thailand, the SET gave up 0.2% after the country's central bank raised its benchmark interest rate by 0.25 percentage points to 0.75% a day earlier. The Southeast Asian country's economy has been hard hit by the pandemic, which ravaged its all-important tourism sector.