NEW YORK (AP) — Wall Street’s latest winning month is heading toward a solid finish as U.S. stocks tick upward toward record heights.
The S&P 500 was 0.5% higher in early trading and on track to surpass its record set last week. The Dow Jones Industrial Average was up 55 points, or 0.1%, as of 9:40 a.m. Eastern time. The Nasdaq composite was 0.8% higher and again flirting with its record set in 2021.
The bond market was relatively quiet, with yields easing a bit, after a closely followed inflation report showed prices across the country rose pretty much exactly as expected last month. A worry on Wall Street had been that the inflation data would show a discomforting reacceleration. Earlier reports had shown prices rose more than expected in January at the consumer and wholesale levels.
“While inflation was hotter than it’s been in a while, it may be more of a flash in the pan than the start of something worse,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Wednesday’s report kept intact hopes that the Federal Reserve will begin cutting interest rates in June. Such a move would relax the pressure on the economy and boost investment prices, and the Fed has already indicated several cuts may be coming this year.
The Fed's main interest rate is sitting at its highest level since 2001 in hopes of grinding down inflation by dragging on the economy through more expensive mortgage and credit-card payments.
Relief on rates, though, would come only if the Fed sees more convincing data that inflation is sustainably heading down toward its target of 2%. Hopes for coming cuts to rates helped launch the U.S. stock market’s big rally in late October, and the S&P 500 is on the verge of closing out its fourth straight winning month.
More recently, traders have been pushing back forecasts for when the Fed may begin cutting rates. A series of reports showing the economy remains stronger than expected have pushed expectations out from March. On Thursday, another report showed fewer U.S. workers filed for unemployment benefits last week than economists expected. It’s the latest signal of a remarkably resilient job market.
In the meantime, the hope is that solid economy will fuel growth in profits for U.S. companies, even if it means a delay to rate cuts.
Salesforce.com became one of the latest companies to report better profit for the latest quarter than analysts expected on Wednesday evening. The customer-resource management software company also said it plans to begin paying a quarterly dividend to its investors, but it also gave a forecast for revenue this upcoming year that was a bit below analysts’ expectations. Its stock fell 1.3%.
Best Buy jumped 6% after it reported better profit and revenue than expected. The retailer also said it’s increasing its dividend and that its paid membership base is growing.
Hormel Foods likewise reported stronger profit and revenue than expected. It cited broad-based growth across its brands, including Skippy peanut better, Chi-Chi’s salsa and Corn Nuts snacks. Its stock leaped 16.2%.
They helped offset a 5.9% drop for Bath & Body Works. The seller of fragrances, body lotion and three-wick candles reported better profit than expected, helped by a strong holiday season, but it said sales may weaken this upcoming year.
Even though it nearly doubled analysts’ fourth-quarter profit projections, the cloud-computing company Snowflake tumbled 19.3% after a surprise announcement that CEO Frank Slootman was retiring effective immediately. Slootman will be replaced by Sridhar Ramaswamy.
In the bond market, the yield on the 10-year Treasury ticked down to 4.25% from 4.27% late Wednesday.
The two-year yield, which more closely tracks expectations for the Fed, dipped to 4.64% from 4.65%. It had been near 4.70% shortly before the morning’s release of the inflation data.
In stock markets abroad, indexes were mixed.
Tokyo’s Nikkei 225 dipped 0.1% after data showed factory output falling in January at the fastest pace since May 2020, though retail sales were stronger than expected.
Hong Kong’s Hang Seng slipped 0.2%, while stocks in Shanghai jumped 1.9%. The smaller index in Shenzhen surged even more after regulators released new measures to support markets including closer oversight of financial derivatives.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
