Following the gains observed in the previous session, stocks are poised to climb further in early trading on Thursday. Futures for the major indexes suggest a positive opening, with S&P 500 futures currently up by 0.4%.
Despite the Federal Reserve's reduced forecast for interest rate cuts this year, optimism about the future rate outlook—buoyed by another lower-than-expected inflation reading—may continue to support stock prices.
The Labor Department released a report this morning indicating an unexpected decline in producer prices for May. The producer price index for final demand fell by 0.2 percent in May after a 0.5 percent increase in April. Analysts had anticipated a slight rise of 0.1 percent.
Additionally, the annual rate of producer price growth eased to 2.2 percent in May from a revised 2.3 percent in April. Economists had forecast the annual growth rate to accelerate to 2.5 percent from the initially reported 2.2 percent for the prior month.
Following yesterday's somewhat softened consumer price inflation figures, this data enhances the belief that Federal Reserve officials were being cautious when predicting only one rate cut for this year.
Further bolstering hopes for future rate cuts, a separate report from the Labor Department showed an unexpected rise in initial claims for U.S. unemployment benefits for the week ended June 8th.
Initial jobless claims increased to 242,000, up by 13,000 from the previous week’s unrevised level of 229,000. Economists had projected a slight decline to 225,000. This rise marks the highest level for jobless claims since 248,000 were recorded in the week ended August 12, 2023.
Despite initial volatility following the Federal Reserve's monetary policy announcement, stocks managed to close mostly higher on Wednesday. The Nasdaq surged ahead, gaining 264.89 points or 1.5 percent to close at a record high of 17,608.44. The S&P 500 also set a new record, climbing 45.71 points or 0.9 percent to 5,421.03.
Conversely, the Dow retraced earlier gains and ended the session down by 35.21 points or 0.1 percent at 38,712.21.
Overseas, the Asia-Pacific stock markets exhibited mixed performances on Thursday. Japan's Nikkei 225 Index declined by 0.4 percent, and China's Shanghai Composite Index fell by 0.3 percent. In contrast, Hong Kong's Hang Seng Index and South Korea's Kospi both rose by 1.0 percent.
In Europe, major markets have all trended downward. The U.K.'s FTSE 100 Index slipped by 0.3 percent, while Germany’s DAX Index and France’s CAC 40 Index dropped by 1.0 percent and 1.1 percent, respectively.
In commodities trading, crude oil futures are down by $0.26 to $78.24 a barrel, after rising $0.60 to $78.50 a barrel on Wednesday. Gold futures have fallen by $20 to $2,334.80 an ounce, following a surge of $28.20 to $2,354.80 an ounce in the previous session.
On the currency front, the U.S. dollar is trading at 156.88 yen, compared to 156.72 yen at the close of New York trading on Wednesday. Against the euro, the dollar is at $1.0797, down slightly from $1.0809 the previous day.
