The S&P 500 and Nasdaq achieved record highs, and the global equity index advanced on Thursday following an eagerly awaited U.S. inflation reading, which brought little surprise to relieved investors and helped push U.S. Treasury yields lower.
The Nasdaq achieved a record closing high for the first time in over two years, marking a rebound from the previous session’s decline, attributed to investor apprehension ahead of the U.S. personal consumer expenditures (PCE) price index data.
However, the PCE data, considered the Federal Reserve’s preferred inflation gauge, revealed the smallest annual increase in inflation in nearly three years, maintaining the possibility of a June interest rate cut from the Fed.
“Today’s market movements really reflect a relief that we aren’t seeing a re-acceleration in inflation. That’s impacted fixed income markets as well as equity markets,” said Sid Vaidya, U.S. wealth strategist at TD Wealth.
Investors had been particularly anxious ahead of the PCE data following hotter-than-expected recent consumer price index (CPI) and producer price index (PPI) readings.
“Markets are actually heaving a bit of a sigh of relief that we didn’t get the same type of upside surprises we saw in the earlier inflation readings,” said Mona Mahajan, senior investment strategist at Edward Jones in New York.
The Dow Jones Industrial Average rose by 47.37 points, or 0.12%, to 38,996.39, while the S&P 500 gained 26.51 points, or 0.52%, achieving a record closing high of 5,096.27.
The Nasdaq Composite gained 144.18 points, or 0.90%, ending at a peak of 16,091.92.
For the month, the S&P rose by 5.17%, while the Nasdaq gained 6.12%, and the Dow increased by 2.22%, with all three registering their fourth straight monthly gains, marking the S&P’s longest streak of monthly gains since the five months ending July 2023.
MSCI’s gauge of global stocks was also aiming for a record close, rising by 2.73 points, or 0.36%, to 760.86.
The STOXX 600 index ended unchanged, while the German DAX climbed 0.4% to a fresh all-time high after data showed that cheaper energy prices slowed inflation down to 2.7% in February.
In U.S. Treasuries, the yield on benchmark U.S. 10-year notes fell by 0.6 basis points to 4.268%, from 4.274% late on Wednesday, while the 30-year bond yield fell by 2.2 basis points to 4.3884%.
In currencies, the dollar index regained lost ground after earlier easing following the data, with the dollar weakening against the Japanese yen and gaining against the euro.
Bitcoin gained ground, eyeing its sixth daily gain in a row as well as its biggest monthly gain in over three years, amid the approval and launch of spot bitcoin exchange-traded funds in the U.S. this year.
In commodities, oil prices slipped after mixed signals about the outlook for crude demand from the world’s top economy, with U.S. crude settling down to $78.26 a barrel and Brent finishing at $83.62 per barrel.
Gold scaled a one-month high, boosted by the dollar decline as traders awaited commentary from Fed officials.