Wall Street lifts as oil dips, inflation eases; ASX set to fall
Stan Choe
Updated ,first published
The US stock market rose to an all-time high following the latest sign that inflation is getting less bad. Stocks also got a lift from easing oil prices in their latest yo-yo move.
The S&P 500 climbed 0.7 per cent and topped its prior record set last week. The Dow Jones Industrial Average added 69 points, or 0.1 per cent, and the Nasdaq composite gained 0.8 per cent.
The Australian sharemarket is set to slide, with futures at 6.38am AEST pointing to a loss of 39 points, or 0.4 per cent, at the open. The ASX lost 0.2 per cent on Thursday. The Australian dollar was steady at US70.53¢.
Wall Street relaxed after a report showed prices at the US wholesale level were 4.7 per cent higher last month than a year earlier. While that’s more painful than anyone would like, it’s not as bad as June’s 5.5 per cent inflation rate at the wholesale level, and it was slightly better than economists expected.
If inflation continues to trend that way, the Federal Reserve could decide to hold off on hikes to interest rates. Higher rates would help keep a lid on inflation, but they do so by intentionally slowing the economy and making it more expensive for everyone to borrow money.
Fed officials are split on whether they should have already begun hiking interest rates. But Thursday’s report, following a similar update on inflation at the US consumer level the day before, has traders now betting on just a 35 per cent chance that the Fed will raise the federal funds rate at its next meeting in September. That’s down from the roughly 50 per cent probability seen two days ago, according to data from CME Group.
Any increase by the Fed would be the first in more than three years. It also could anger President Donald Trump, who has been lobbying for lower interest rates.
Treasury yields sank in the bond market, which eases pressure on stocks and other investments. The yield on the 10-year Treasury fell to 4.65 per cent from 4.68 per cent late Wednesday and from 4.72 per cent on Monday, though it’s still well above its 3.97 per cent level from before the war with Iran sent oil and gasoline prices surging.
Oil prices eased back on Thursday, helping to limit worries about inflation. The price for a barrel of Brent crude oil fell 2.1 per cent to $87.07.
It’s been swinging sharply recently and pinballed between $72 and $102 last month as hopes rose and fell that a deal in the war could allow oil tankers to freely exit the Middle East again and deliver crude worldwide.
On Wall Street, stocks in the real-estate industry climbed to some of the market’s bigger gains. When interest rates are lower and bonds are paying less in yield, the dividends that many real-estate investment trusts pay look more attractive.
Lower mortgage rates could also drive more activity in the housing market, and the average long-term US mortgage rate fell this week for the first time in six weeks.
AvalonBay Communities, which owns apartments across the country, rose 2.3 per cent. Homebuilder D.R. Horton added 2.8 per cent.
Fossil Group climbed 5.9 per cent after the seller of watches and jewellery became one of the latest companies to report better results for the latest quarter than analysts expected. Such reports have helped drive Wall Street to records because stocks tend to track the path of corporate profits over the long term.
They helped offset a drop for Cisco Systems, which fell 8.4 per cent even though the tech giant reported stronger profit and revenue for the latest quarter than Wall Street expected.
Analysts said investors may be worried about its profit margins going forward, and its stock has been shaky through the summer amid worries that AI-related stocks in general shot too high.
All told, the S&P 500 rose 50.49 points to 7,798.99. The Dow Jones Industrial Average added 69.72 to 53,839.99, and the Nasdaq composite climbed 214.54 to 26,803.03.
In stock markets abroad, indexes dipped in Europe following a mixed finish in Asia.
South Korea’s Kospi again had one of the world’s biggest moves and jumped 3.6 per cent. Seoul has been at the centre of the world’s swings for artificial-intelligence stocks because its market is dominated by two tech giants, Samsung Electronics and SK Hynix.
AP
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