Key Takeaways:
- S&P 500 closes at record 7,798.99 after flat July PPI
- Fed funds futures now price 63 percent odds of a September hold
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S&P 500 hits record 7,799 as PPI data cools rate fears
The S&P 500 rose 0.65 percent to a record 7,798.99 after July producer prices were unchanged, easing bets on a September Federal Reserve rate hike.
"Traders are guarding against 'the Mike Tyson,' the punch you don't see," said JJ Kinahan, senior vice president at CBOE Global Markets.
The Dow Jones Industrial Average added 69.72 points, or 0.13 percent, to 53,839.99, while the Nasdaq Composite climbed 214.54 points, or 0.81 percent, to 26,803.03. Seven of 11 S&P 500 sectors finished higher, led by communication services at 1.56 percent and real estate at 1.34 percent. The 10-year Treasury yield fell 5 basis points to 4.64 percent, and the two-year yield dropped 6 basis points to 4.14 percent. WTI crude fell 2.4 percent to $81.25 a barrel, while Brent settled at $87.07, down 2.15 percent.
Fed funds futures now imply a 63 percent probability the central bank holds rates steady at its September meeting, up from 50 percent on Wednesday. The FOMC decision on Sept. 16-17 will weigh the cooling inflation data against elevated geopolitical risk from the Strait of Hormuz, where tanker traffic remains curtailed.
The Labor Department reported the Producer Price Index was unchanged in July from June, below the 0.2 percent consensus forecast. Year-over-year wholesale inflation slowed to 4.7 percent from 5.5 percent the prior month. The reading followed Tuesday's consumer price index, which also showed moderating price pressures, reinforcing the disinflation trend ahead of the Fed's policy meeting.
Memory chip makers powered the advance. SanDisk surged 13.7 percent to $1,528.11 after forecasting mid-to-high-teen percentage revenue growth annually between fiscal 2028 and 2030. Micron Technology climbed 4.2 percent. Microsoft added nearly 1 percent, while Meta Platforms rose 2.8 percent. Netflix gained 5.4 percent after Bill Ackman's Pershing Square disclosed a new stake in the streaming company.
AI Divergence Widens
Not all AI names participated in the rally. Cerebras fell 12 percent to $231.01 after a surge in revenue for the AI chip maker failed to meet investors' increasingly lofty expectations. Cisco Systems tumbled 8.4 percent to $113.47 despite Chief Executive Chuck Robbins describing demand growth at the strongest rate in 30 years, as analysts said the networking equipment maker took a conservative approach to its growth projections.
"The bar's so high, and you have to beat it," Kinahan said. "For a while, you just had to say the words 'AI' somewhere on the call and you were good. Now if you say 'AI,' you have to say 'this is what we spent on it, and this is the return we're seeing.'"
"The AI earnings-driven tech boom continues," said Jay Hatfield, CEO of Infrastructure Capital Advisors in New York. "It's an earnings boom, not a bubble."
Tapestry fell 16 percent to $128.39 as investors questioned how long a resurgence in demand for Coach bags can offset weakness at Kate Spade. StubHub dropped 10 percent to $7.68 after World Cup-related refunds and expenses weighed on quarterly earnings.
Oil, Rates, and the Geopolitical Wildcard
Oil prices gave back some recent gains despite gridlock in tanker traffic through the Strait of Hormuz. The International Energy Agency lowered its 2026 global oil demand forecast by 1.6 million barrels per day, citing higher fuel prices from shipping disruptions. Brent crude settled at $87.07 a barrel, down 2.15 percent, while WTI fell 2.4 percent to $81.25.
The dollar index edged up 0.01 percent to 99.96, while the euro traded at $1.1528. Gold futures fell 1 percent to $4,363.60, snapping a four-session winning streak. The 30-year Treasury yield slipped 3 basis points to 5.22 percent.
Market breadth was solid. Advancing issues outnumbered decliners within the S&P 500 by a 1.7-to-1 ratio, with 30 new 52-week highs against one new low. Trading volume was lighter than usual at 16.1 billion shares, below the 17.5 billion 20-day average.
The S&P 500 is up roughly 14 percent for 2026, while the Nasdaq has gained about 15 percent. The record close marks a shift from earlier in the month, when concerns about stubborn inflation and potential Fed tightening weighed on equities.
This article is for informational purposes only and does not constitute investment advice.
[1] U.S. Stocks Rise, S&P 500 Closes at Record High - WSJ[2] SA analyst says rate hike fears are fading as S&P 500 hits record | Seeking Alpha[3] S&P 500 Sets Fresh Record as Tame Inflation Data Soothes Rate Fears[4] Wall Street rallies as easing inflation and cheaper oil lift S&P 500 to record - CHOSUNBIZ[5] Stocks rise as traders reduce rate hike bets, oil prices drop
