Dow Futures Rise, Inflation Cools — and What Else Is Happening in the Stock Market Today

Traders are hoping U.S. inflation has peaked.


(Photo by Getty Images)

Stock futures traded higher Thursday after U.S. inflation in July cooled more than expected, leading investors to believe the data could allow the Federal Reserve to be less aggressive in trying to slow the economy.

Contracts linked to the


Dow Jones Industrial Average

were up 96 points, or 0.3%, to 33,356,


S&P 500

futures gained 0.3% and


Nasdaq

futures rose 0.5%.

Stocks closed with sharp gains on Wednesday on hopes that U.S. inflation has peaked. The Dow rose more than 500 points, and the S&P 500 jumped 2.1%. The tech-heavy Nasdaq rallied 2.9%, and has gained more than 20% since June.

The consumer price index, released Wednesday, showed U.S. headline inflation at 8.5% in July, lower than expectations of 8.7% and below 9.1% in June. Wall Street took the the data as a potential sign that the Federal Reserve might be able to slow its pace of interest-rate hikes.

Fed officials, however, were quick to note that inflation remains “unacceptably high.” Chicago Fed President Charles Evans said he expects the central bank “will be increasing rates the rest of this year and into next year to make sure inflation gets back to our 2% objective.”

Jeffrey Roach, chief economist at LPL Financial said the Federal Reserve “still has a lot of work to in tightening financial conditions,” and that inflation “is clearly still the primary concern for policy makers.”

But Roach said that as inflation slows the Fed could revert to raising rates by 0.5 a percentage point at its next meeting in September. Ahead of the inflation print Wednesday, Fed watchers were forecasting the central bank would raise rates for the third straight time by 0.75 a percentage point.

“Traders are growing confident that if the next inflation report on Sept. 13 confirms this softening pricing pressure trend, the Fed may seriously consider a smaller pace of tightening,” said Edward Moya, senior market analyst at Oanda. “It is too early to say that the Fed will only raise rates by a half-point in September, but if inflation keeps on cooling sharply the Fed’s dovish tendencies will return. “

Elsewhere,



Walt Disney

(ticker: DIS) reported better-than-expected fiscal third-quarter earnings and subscriber growth. The media and entertainment giant also said it would raise the price of its Disney+ streaming service starting in December and introduce a cheaper ad-supported tier.

Write to Joe Woelfel at joseph.woelfel@barrons.com

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