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U.S. weekly jobless claims increase
Producer prices data cooler than expected
Netflix jumps after Wedbush sees revenue growth
Harley-Davidson dips as CFO steps down
Indexes up: Dow 1.14%, S&P 1.33%, Nasdaq 1.99%
Updates with closing prices
By Stephen Culp
NEW YORK, April 13 (Reuters) – U.S. stocks ended sharply higher on Thursday as economic data showed cooling inflation and a loosening labor market, fueling optimism that the Federal Reserve could be nearing the end of its aggressive interest rate hike cycle.
All three major U.S. stock indexes surged more than 1%, with interest rate sensitive megacaps including Apple Inc AAPL.O, Microsoft Corp MSFT.O and Amazon.com AMZN.O providing the most upside muscle and pushing the tech-heavy Nasdaq up nearly 2% to its biggest one-daypercentage jump in nearly a month.
Data released before the bell showed a steeper-than-expected cooldown in producer prices and coming in above consensus. Both signal that the Fed’s hawkish barrage of rate hikes, which began over a year ago, is working as intended.
The data comes on the heels of Wednesday’s muted Consumer Price Index report, which cemented the likelihood of yet another 25 basis point rate hike at the conclusion of next month’s Federal Open Market Committee policy meeting.
“Markets rallied today following the lower inflation data this morning, as it’s still all about the Fed so it’s really all about inflation,” said David Carter, investment specialist at JPMorgan Private Bank in New York.
“Together with yesterday’s muted CPI data, PPI is also suggesting some slowdown in inflation which could mean a quick end to Fed tightening.”
Financial markets are pricing in a roughly one-in-three probability that the central bank will press the pause button and let the Fed funds target rate stand in the 4.75% to 5.00% range, according to CME’s FedWatch tool.
Investor focus now shifts to first-quarter earnings season, which jumps into full swing on Friday when a trio of big banks, Citigroup C.N, JPMorgan Chase & Co JPM.N, Wells Fargo & Co WFC.N report.
“Tomorrow’s bank earnings could give insight into the strength of regional banks and future lending activity,” Carter added. “It will be interesting to see what banks say tomorrow about future economic growth.”
Analysts expect aggregate first-quarter S&P 500 earnings to come in 5.2% below the year-ago quarter, a stark reversal from the 1.4% year-on-year growth seen at the beginning of the quarter, according to Refinitiv.
The Dow Jones Industrial Average .DJIrose 383.19 points, or 1.14%, to 34,029.69; the S&P 500 .SPXgained 54.27 points, or 1.33%, at 4,146.22; and the Nasdaq Composite .IXICadded 236.94 points, or 1.99%, at 12,166.27.
Among the 11 major sectors of the S&P 500, all but real estate .SPLRCR ended the session higher, with communication services .SPLRCL and consumer discretionary .SPLRCD enjoying the largest gains, both jumping 2.3%.
Delta Air Lines Inc DAL.N shares fell 1.1% following the company’s first-quarter profit miss.
Shares of Harley-Davidson Inc HOG.N slid 1.7% after the motorcycle maker announced Chief Financial Officer Gina Goetter was leaving the company at the end of April.
Groupon Inc GRPN.O jumped 4.0% after the company appointed Jiri Ponrt to succeed Damien Schmitz as chief financial officer.
Netflix Inc NFLX.O rose 4.6% after Wedbush said the streaming platform’s revenue growth of new subscribers could drive up profitability.
Advancing issues outnumbered decliners on the NYSE by a 2.71-to-1 ratio; on Nasdaq, a 2.55-to-1 ratio favored advancers.
The S&P 500 posted 12 new 52-week highs and one new low; the Nasdaq Composite recorded 69 new highs and 140 new lows.
Volume on U.S. exchanges was 10.40 billion shares, compared with the 11.51 billion average over the last 20 trading days.
Inflationhttps://tmsnrt.rs/3KUFKgS
(Reporting by Stephen Culp; Additional reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Richard Chang)
((stephen.culp@thomsonreuters.com; 646-223-6076;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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