S&P 500 Hits Record High as Soft Inflation Data Eases Fed Rate Hike Fears

U.S. stock futures were largely unchanged Thursday evening after the S&P 500 closed at a record high, as softer producer inflation data eased concerns about a potential Federal Reserve interest-rate hike in September.

S&P 500 futures traded near 7,824.25, while Nasdaq 100 futures hovered around 30,178.50. Dow Jones futures were also flat at approximately 53,943 points.

Wall Street finished Thursday’s regular session higher, with the S&P 500 gaining 0.7% to a record 7,798.99. The Nasdaq Composite advanced 0.8%, while the Dow Jones Industrial Average edged up 0.1%.

Technology stocks helped drive the rally. SanDisk shares surged nearly 14% following an optimistic long-term outlook, while Micron Technology climbed 4.2%. Microsoft gained almost 1%, and Meta Platforms jumped 2.8%.

Investor sentiment improved after U.S. producer price index data showed prices were unchanged in July following a revised 0.1% decline in June. On an annual basis, producer prices increased 4.7%, slowing considerably from June’s 5.5% rise.

The cooler PPI reading, combined with relatively moderate consumer inflation data and signs of weakness in the labor market, reduced expectations for a Federal Reserve rate increase in September. CME FedWatch data indicated markets were pricing in roughly a 65% probability that interest rates would remain unchanged.

Attention now shifts to Friday’s U.S. retail sales report, which could provide further insight into consumer spending and economic resilience. Investors will also monitor business inventories and the University of Michigan consumer sentiment report.

Oil prices remain another key factor for markets and the Fed’s inflation outlook. Brent crude dropped 2% to $87.07 per barrel on Thursday but remained elevated as Middle East tensions continued to threaten global energy supplies.

Concerns center on restricted tanker traffic through the Strait of Hormuz as efforts to resolve the conflict and restore normal shipping remain stalled. Persistently high energy prices could revive inflation pressures, potentially complicating the Federal Reserve’s path on interest rates.