S&P 500 Hits Record High 7,799 as Cool Inflation Data Lifts Rate-Cut Hopes

The S&P 500 closed at a record high on Thursday, lifted by a flat July producer price report. The reading further eased worries about a Federal Reserve rate hike next month.

The benchmark index rose 0.65% to close at 7,798.99, after touching an intraday all-time high of 7,816.70. It marked the index’s 27th record close of the year. The Nasdaq Composite gained 0.81% to 26,803.03, and the Dow added 0.13% to 53,839.99. The S&P 500 is up over 14% in the last six months.

Inflation Keeps Cooling

The Bureau of Labor Statistics said the Producer Price Index for final demand was unchanged in July. Economists had forecast a 0.2% rise.

The S&P 500 has once again broken a new all time high. Image Source: Trading View

Annual producer-price growth slowed to 4.7% from 5.5% in June. That followed Wednesday’s Consumer Price Index report. Prices rose just 0.1% for the month and 3.4% over the past year.

Not everyone is convinced the Fed is done tightening. BofA still expects three more Fed hikes, arguing the disinflation trend remains incomplete.

Traders now put a 63% chance on the Fed holding rates steady in September, according to CME’s FedWatch tool. That marks a sharp shift from expectations a month ago that favored another hike.

Rally Broadens Beyond Tech

Communication services led Thursday’s gains, up 1.56%, followed by a 1.34% advance in real estate. Both sectors are sensitive to borrowing costs.

Chipmakers Sandisk and Micron Technology surged 13.7% and 4.2%. The move extended a run that has made semiconductor names this year’s biggest gainers. Cisco Systems dropped 8.4% despite an upbeat revenue forecast that fell short of high expectations.

Sandisk is one of the Nasdaq’s best preforming stocks, up over 525% YTD. Image Source: Trading View

Workday shares jumped 18% after Reuters reported that Silver Lake is in talks to acquire the company. The private equity firm’s deal could value the human-resources software maker near $43 billion. The talks are ongoing, and sources cautioned no agreement is guaranteed.

Netflix climbed 5.4% after investor Bill Ackman disclosed a new stake in the streaming company. Tapestry shares plunged more than 16% on a muted revenue forecast.

“The AI earnings-driven tech boom continues. It’s an earnings boom, not a bubble.”

Jay Hatfield, chief executive of Infrastructure Capital Advisors, said.

Thursday’s record extends a run that JPMorgan and CFRA recently flagged for rising complacency risk. Hedging demand now sits near multi-month lows.

One more inflation print lands before the Fed’s September decision. The rally’s foundation is not yet settled.