WASHINGTON (dpa-AFX) - With traders reacting positively to highly-anticipated consumer price inflation data, stocks have moved sharply higher in morning trading on Thursday. The major averages have all shown strong moves to the upside, with the Nasdaq and S&P 500 bouncing off their lowest closing levels in a month.
The major averages have pulled back off their best levels in recent trading but remain firmly positive. The Dow is up 395.16 points or 1.1 percent at 35,518.52, the Nasdaq is up 183.36 points or 1.3 percent at 13,905.38 and the S&P 500 is up 49.19 points or 1.1 percent at 4,516.90.
The rally on Wall Street comes after the Labor Department released a report showing the annual rate of consumer price inflation accelerated by slightly less than expected in the month of July.
The report said the annual rate of growth by consumer prices accelerated to 3.2 percent in July from 3.0 percent in June, while economists had expected the pace of price growth to accelerate to 3.3 percent.
The Labor Department also said its consumer price index rose by 0.2 percent on a monthly basis in July, matching the uptick seen in June as well as expectations.
Excluding food and energy prices, core consumer prices also rose by 0.2 percent for the second straight month in July, in line with estimates.
Meanwhile, the annual rate of growth by core consumer prices slowed to 4.7 percent in July from 4.8 percent in June. The rate of growth was expected to be unchanged.
'After a roughly in-line inflation report, Wall Street remained optimistic that the Fed won't need to raise rates in September,' said Edward Moya, senior market analyst at OANDA. 'Headline inflation rose but that was mainly due to the large drop we saw last month from the base effects.'
'Traders focused on the monthly readings and both headline and core saw gains held steady at 0.2%,' he added. 'Markets are growing confident that the Fed is done raising rates as risk appetite remains intact as stocks rally and the dollar drops.'
Adding to optimism about the outlook for rates, a separate Labor Department report showed first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended August 5th.
The report said initial jobless claims climbed to 248,000, an increase of 21,000 from the previous week's unrevised level of 227,000. Economists had expected jobless claims to inch up to 230,000.
Sector News
Networking stocks are turning in some of the market's best performances on the day, with the NYSE Arca Networking Index surging by 3.3 percent after ending the previous session at its lowest closing level in over two months.
Within the networking sector, Infinera (INFN) and Viasat (VSAT) are posting standout gains after reporting their quarterly results.
Semiconductor, software and computer hardware stocks are also seeing considerable strength, contributing to the rebound by the tech-heavy Nasdaq.
Significant strength is also visible among telecom stocks, as reflected by the 1.5 percent gain being posted by the NYSE Arca North American Telecom Index. The index has reached its best intraday level in almost four months.
Brokerage, retail and biotechnology stocks are also seeing notable strength on the day, moving higher along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 0.8 percent, while China's Shanghai Composite Index rose by 0.3 percent.
The major European markets have also moved to the upside on the day. While the French CAC 40 Index has spiked by 1.9 percent, the German DAX Index is up by 1.3 percent and the U.K.'s FTSE 100 Index is up by 0.4 percent.
In the bond market, treasuries have pulled back near the unchanged line after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 4.009 percent.
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