Wall Street Rises Again as Inflation Slows

NEW YORK (AP) -- Wall Street is adding to its winning week Thursday following the latest signal that inflation is continuing to ease its chokehold on the economy.

The S&P 500 was 0.6% higher in early trading and on pace for its seventh winning week in the last nine. The Dow Jones Industrial Average was up 104 points, or 0.3%, at 34,451, as of 10 a.m. Eastern time, and the Nasdaq composite was 1% higher.

Stocks are building on gains after more data raised hopes that inflation is cooling enough to convince the Federal Reserve to end its blistering run of hikes to interest rates very soon. Inflation at the wholesale level slowed more than expected in June, and prices paid by producers were just 0.1% higher during the month than a year earlier. That's down from 11.2% inflation last summer.

High inflation has been the main reason investors have been fearing a possible recession, because of how high the Federal Reserve has cranked interest rates in order to get prices under control. High rates undercut inflation by bluntly slowing the entire economy. Not only does that raise the risk of a recession and hurt prices for investments, it can also cause unanticipated parts of the economy to break.

Traders remain nearly convinced the Fed will raise rates at its next meeting in two weeks. If it does, the federal funds rate would be at its highest level since 2001 after starting last year at virtually zero. But this week's inflation data has also pushed traders to build bets that this upcoming rate increase will be the last of the cycle.

A report on Wednesday showed that prices consumers paid in June were 3% higher than a year earlier, down from inflation of more than 9% last summer.

Treasury yields fell further in the bond market as trades pared back bets for Fed rate hikes later thi syear.

The 10-year Treasury yield fell to 3.80% from 3.86% late Wednesday and from 3.98% late Tuesday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield fell to 4.65% from 4.75% late Wednesday and from 4.89% late Tuesday. It moves more on expectations for action by the Fed.

Easier interest rates help all kinds of investments, from stocks to bonds to crypto. But many investors see them helping big technology and other high-growth stocks the most.

That had stocks like Amazon, Microsoft and Nvidia pushing up the most on the S&P 500. Amazon gained 1.9%, Microsoft added 0.9% and Nvidia rose 1.9%.

PepsiCo added 0.1% after it beat analysts' profit expectations for the spring. It saw lower demand for drinks and snacks, but higher prices helped its earnings. It also raised its forecasts for results for the full year.

Delta Air Lines flipped from an early gain to a loss after reporting record profit and revenue for the latest quarter, despite some forecasts for a pullback in spending. Travelers are pouring into the sky, and Delta said strong demand is continuing into the current quarter. It was down 0.3%.

The earnings reporting season is just getting underway, and JPMorgan Chase will lead a barrage of banks on Friday that will tell investors how much they made during the spring. Expectations overall are dim, and analysts are forecasting the sharpest drop in earnings for S&P 500 companies since the pandemic was walloping the global economy in the spring of 2020.

Those low expectations, though, also give companies easier hurdles to jump to beat forecasts. If they can, it would add momentum to a Wall Street that's already been climbing on strengthening hopes the U.S. economy can avoid a long-predicted recession.

On the losing side of Wall Street Wednesday was Exxon Mobil. It fell 1.4% after saying it would buy Denbury, which owns carbon dioxide pipelines, for $4.9 billion in stock. Denbury slipped 0.6%.

In Asia, Hong Kong's Hang Seng rose 2.6% and stocks in Shangai gained 1.3%, even as China reported a slump in trade in June.

Chinese exports tumbled 12.4% in June from a year earlier as demand weakened after central banks raised interest rates to curb inflation.

The Kospi rose 0.6% after the Bank of Korea left its policy interest rate unchanged, as expected, but noted that the risk of inflation was accelerating again.

Stocks in Europe were modestly higher.