S&P 500, Nasdaq end sharply higher on soft inflation data, eyes on earnings
Interest rate-sensitive megacaps gave the tech-heavy Nasdaq a decisive edge. The S&P 500 also closed in positive territory, while the Dow ended essentially unchanged.
The Producer Prices index (PPI) came in softer than expected, supporting the narrative that price growth is still cooling.
«The data this morning was mildly more supportive of sort of a benign 'soft landing' outcome than the data yesterday,» said Brian Nick, senior investment strategist at Macro Institute. «I guess it feels like a natural kind of snapback from, what was potentially an overreaction yesterday.»
On Wednesday, hotter-than-expected CPI data sent stocks sharply lower and benchmark Treasury yields to their highest level since November. The report doused hopes that the central bank could implement as many as three rate cuts before year-end, possibly starting as soon as its June policy meeting.
«There's a suggestion that the inflation numbers the Fed really cares about — the PCE numbers — aren't going to be quite as dire as CPI,» Nick added. «And the parts of the market that were most punished yesterday are having a bit of a comeback today.»
While the PPI data was more encouraging, the data did indicate that inflation's journey down toward the central bank's annual 2% target might be too meandering for the Fed.
New York Fed President John Williams said «there's no clear need to adjust monetary policy in the very near term.»
Richmond Fed President Thomas Barkin said the central bank is not yet confident pricing pressures will continue
