Stocks Conclude with Gains Following Inflation Data

Stocks closed higher on Thursday following the release of the latest inflation data, which showed a slight increase on an annual basis. This marks the first time in over a year that inflation has shown signs of picking up. However, investors found solace in the fact that disinflationary trends remained positive.

At the end of the trading day, the Dow Jones Industrial Average (^DJI) recorded a gain of approximately 0.2%. The S&P 500 (^GSPC) remained relatively flat, while the Nasdaq Composite (^IXIC) saw a modest increase of 0.1%. It’s worth noting that all three indexes had trimmed their larger gains from earlier in the session.

The Consumer Price Index (CPI), a widely followed measure of inflation, showed a 0.2% increase compared to the previous month and a 3.2% increase compared to the previous year in July. These figures were in line with the 0.2% month-over-month increase seen in June but slightly higher than the 3% annual increase recorded in the same period. Economists surveyed by Bloomberg had anticipated a 3.3% yearly increase for July.

On a “core” basis, which excludes the more volatile costs of food and gas, prices rose by 0.2% over the previous month and 4.7% over the last year in July. These figures exceeded economists’ expectations slightly. Notably, core inflation experienced its slowest pace of growth since October 2021.

As quarterly earnings season nears its close, investors are keeping a close eye on the reports from Alibaba (BABA) and Ralph Lauren (RL). Shares of Disney (DIS) closed up nearly 5% after the company announced plans to raise monthly prices for its ad-free streaming plans.

The reaction in the market to the inflation data indicates a cautious optimism among investors. While any increase in inflation could raise concerns, the fact that disinflationary trends remained positive helped alleviate some of those worries. The Federal Reserve has been closely monitoring inflation as it determines its monetary policy decisions.

Overall, the market remains vigilant, closely watching economic indicators and corporate earnings. This ongoing assessment of the recovery trajectory and potential implications for future policy actions will continue to shape investor sentiment in the coming days and weeks.