NEW YORK: U.S. stocks closed mixed on Thursday, with the S&P 500 edging to a new record while the Dow Jones and Nasdaq ended flat, as hotter-than-expected producer price data tempered expectations for interest rate cuts.
The Labor Department reported that producer prices in July rose at the fastest pace in three years, driven by a sharp increase in the cost of goods and services. The data signaled a potential broad-based pickup in inflation.
Following the report, traders trimmed their expectations for Federal Reserve rate cuts this year to around 56.7 basis points, down from roughly 63 basis points before the release, according to LSEG data. Markets still fully price in a quarter-point cut in September.
“The Fed will likely deliver a 25-basis-point cut in September, but it will be a hawkish cut,” said Thierry Wizman, global FX and rates strategist at Macquarie Group. “It’s too early for the Fed to signal an extended easing cycle. The next key indicator will be the Expenditures Price Index later this month—if inflation in services is evident, markets won’t like it.”
A separate report showed U.S. jobless claims fell last week.
The Dow Jones Industrial Average slipped 11.01 points, or 0.02%, to 44,911.26. The S&P 500 added 1.96 points, or 0.03%, to 6,468.54—its second straight record close—while the Nasdaq Composite eased 2.47 points, or 0.01%, to 21,710.67. Seven of the S&P 500’s 11 sectors ended lower.
Earlier signs of labor market softness and moderate consumer price growth had strengthened bets on a September rate cut. But Thursday’s PPI reading revived concerns that U.S. tariffs on imports could soon push prices higher, potentially cooling the recent stock rally that propelled the S&P 500 and Nasdaq to record highs this week.
“U.S. stocks are expensive,” said Sam Stovall, chief investment strategist at CFRA Research, noting the S&P 500’s forward price-to-earnings ratio of 23—about 40% above its 20-year average. “The PPI report has investors guessing: will the Fed cut rates or not?”
St. Louis Fed President Alberto Musalem, a voting member of the FOMC, said a half-point cut in September is not justified—a day after Treasury Secretary Scott Bessent said it remained a possibility.
Stock movers:
- Intel Corp surged 7.4% after Bloomberg reported the Trump administration is in talks to potentially take a stake in the chipmaker.
- Cisco Systems fell 1.6% after issuing a forecast largely in line with expectations.
- Deere & Co dropped 6.8% on weaker quarterly profit and a trimmed full-year outlook.
- Tapestry plunged 15.7% after its profit forecast missed estimates; both Deere and Tapestry warned about tariff impacts.
On the geopolitical front, attention is on President Donald Trump’s upcoming meeting with Russian President Vladimir Putin, aimed at brokering a halt to the Ukraine conflict.
Decliners outnumbered advancers by 2.29-to-1 on the NYSE and by 2.14-to-1 on the Nasdaq. The S&P 500 recorded 15 new 52-week highs and one new low; the Nasdaq posted 78 new highs and 78 new lows.
Trading volume was light, with 16.3 billion shares changing hands on U.S. exchanges, compared with the 20-session average of 18.3 billion.
