The Dow Jones Industrial Average rose 1.1% on Thursday to close at 52,177.69, snapping a two-day losing streak as traders moved past fresh concerns about rising prices. The S&P 500 gained 0.3% to finish at 7,744.06, while the Nasdaq Composite edged up 0.1% to 26,713.03. Most sectors ended the day in positive territory, with healthcare leading the advance and energy among the laggards.
The market reaction followed the release of official data showing US producer prices jumped at the fastest pace in more than four years in September, driven by a surge in energy costs. This development came one day after reports indicated that consumer inflation had also accelerated in the same period. Lindsey Piegza, chief economist at Stifel, noted in an e-mailed remark that the acceleration in both consumer and producer prices should embolden the Federal Open Market Committee to move forward with an additional rate hike. Piegza cited additional upside risks stemming from energy costs, noting that crude oil prices remained around $105 a barrel despite increased traffic through the Strait of Hormuz and higher supply from the Middle East.
Despite the inflation data, market expectations for a rate increase shifted slightly. According to the CME FedWatch tool, the probability of the US central bank hiking rates by 25 basis points later in October fell to 27% on Thursday, down from 33% on Wednesday. Conversely, markets priced in a 73% probability that the benchmark rate would remain steady, up from 67% the previous day.
In other economic news, US retail sales growth exceeded expectations in September, supported by increased outlays at gas stations amid elevated fuel prices. TD Economics stated in a note that the pace of spending is likely to cool over coming quarters as households face headwinds including soft real income growth, a declining saving rate, high energy costs, and elevated interest rates.
Treasury yields were mostly lower on Thursday. The two-year rate dropped 4.5 basis points to 4.76%, while the 10-year rate fell 9.9 basis points to 5.09%. In corporate news, International Paper shares jumped 6.9% after the company confirmed it is in talks with potential bidders regarding a possible sale of its EMEA packaging unit. Penske Automotive shares surged 8.8% following an agreement to be taken private by its two largest shareholders, Penske and Mitsui, in a deal valuing the company at approximately $16.3 billion.
Charles Schwab shares fell 2.7% after the company reported third-quarter revenue just below Wall Street estimates and projected full-year top-line growth at the lower end of its previous guidance. Banking stocks showed mixed results; PNC Financial Services shares edged down 0.4%, while US Bancorp rose 2% and First Horizon gained 0.8%, even as net interest income for these firms fell short of analyst expectations.
Commodity markets saw varied movements on Thursday. West Texas Intermediate crude oil advanced 2.7% to $97.69 a barrel in late-afternoon trade, while Brent crude edged down 0.2% to $105.82. The International Energy Agency outlined plans on Thursday to release more than 20 million barrels of diesel as soon as possible to address a global supply crunch. Spot gold climbed 1.7% to $4,173.58 per troy ounce, and silver jumped 3.1% to $57.60 per ounce.