NEW YORK — Stocks swung through shaky trading Thursday following the latest update on inflation across the U.S., only to end up roughly where they started.
The S&P 500 edged up by 1.12, or less than 0.1%, to 4,468.83. It was just the second winning day for the index in the past eight, but it had been up 1.3% in the morning before wobbling between small gains and losses.
The Dow Jones Industrial Average gained 52.79, or 0.2%, to 35,176.15 after giving up most of a morning gain of 455 points. The Nasdaq composite added 15.97, or 0.1%, to 13,737.99.
The morning's highly anticipated report showed U.S. consumers paid prices that were 3.2% higher in July than a year earlier. That’s a touch milder than the 3.3% inflation rate economists expected to see and down sharply from last summer’s peak above 9%. Beneath the surface, underlying trends for inflation were also within expectations.
People are also reading…
The readings bolstered hopes among investors that the Federal Reserve’s campaign to grind down inflation is progressing and that it could maybe even be done hiking interest rates. High rates undercut inflation by slowing the entire economy and hurting investment prices, which raise the risk of a recession.
Such hopes helped the S&P 500 rally a big 19.5% through the first seven months of the year. But critics have been saying Wall Street latched too quickly and forcefully onto a belief that inflation will continue to cool, the economy will avoid a recession and the Fed has already hiked rates for the final time this cycle. Several economists said again on Thursday that future moves by the Fed are still uncertain, tamping down some enthusiasm.
The Fed has said it will make upcoming decisions on rates based on what data reports say, particularly those on inflation and the job market. Its main interest rate is already at its highest level in more than two decades.
Thursday’s report likely gives the Fed a reason to hold rates steady at its next meeting in September, before it gets more economic data in the runup to the following meeting that ends Nov. 1, according to Gargi Chaudhuri, head of iShares Investment Strategy, Americas.
“Separating the signal from the noise, most of the components of inflation are heading in the right direction," said Brian Jacobsen, chief economist at Annex Wealth Management. He said if the trends continue, it will be tough to justify another hike to interest rates.