On Wednesday, the U.S. benchmark equity indexes demonstrated a positive trend, with noteworthy closures primarily on the rise, backed by the latest economic data reflecting consumer inflation in line with market expectations for July. The annual rate of price growth, however, experienced an unexpected decline, fostering a favorable atmosphere for market participants. The Dow Jones Industrial Average showed a commendable increase of 0.6%, closing at 40,008.4 points.
Simultaneously, the S&P 500 index witnessed an advance of 0.4%, finishing at 5,455.2. In contrast, the Nasdaq Composite remained relatively unchanged, standing at 17,192.6. Among various sectors, financial stocks spearheaded the upward movement, while communication services experienced the steepest declines. In terms of economic insights, the U.S.
consumer price index (CPI) saw a modest increase of 0.2% in the previous month, following a marginal 0.1% dip in June, as per the Bureau of Labor Statistics. This result aligned with expectations from a recent Bloomberg-compiled survey. Year-over-year, inflation experienced a notable easing to 2.9% in July, marking the lowest annual increase since March 2021.
Market consensus had anticipated that the annualized metric would remain steady at a 3% growth rate. TD Securities presented a compelling analysis in a note to clients, stating, "With the labor market exhibiting clear signs of cooling and inflationary pressures receding, the Federal Reserve is well-positioned to begin adjusting its policy rate by September." Data released on Tuesday highlighted that U.S.
producer prices exhibited growth that fell short of expectations last month. Stifel further remarked on Wednesday that a cooler-than-anticipated headline CPI, coupled with a second month of easing producer price pressures, "strengthens the argument" for considering interest rate reductions in the near future. "Nevertheless, it is essential to acknowledge that the data remains variable and unpredictable.
Even with improving conditions, any rate cuts are likely to occur gradually, potentially disappointing investor expectations for a swift return to neutral policy, let alone a more accommodating stance," the brokerage elaborated. In terms of yields, the U.S. two-year yield experienced a slight uptick, rising by 1.8 basis points to reach 3.96%, while the yield on the 10-year note faced a decrease of 1.7 basis points, settling at 3.84%.
Furthermore, mortgage applications surged last week, achieving the highest level since January 2023, attributed to increased refinancing activities, as reported by the Mortgage Bankers Association. On the commodities front, West Texas Intermediate (WTI) crude oil prices saw a drop of 1.5%, concluding at $77.18 per barrel.
U.S. commercial crude stockpiles rose by 1.4 million barrels, totaling 430.7 million barrels for the week ending last Friday, as indicated by the Energy Information Administration. This figure contrasted with a consensus forecast of a 2-million-barrel decrease, according to a Bloomberg poll. In corporate news, Kellanova ($K) finalized an acquisition agreement with Mars— a leading confectionery and pet food company— in an all-cash transaction valued at $35.9 billion, which includes assumed net leverage.
The announcement led to a notable 7.8% jump in Kellanova's stock, making it the standout performer within the S&P 500. Meanwhile, Cardinal Health ($CAH) rose to prominence among S&P 500 gainers, recording a 3.7% increase as the drug distributor lifted its full-year earnings forecast after surpassing market expectations in its fiscal fourth-quarter results. Conversely, Alphabet's shares ($GOOGL, $GOOGL) suffered declines exceeding 2.3% each, positioning them among the most significant losers on both the S&P 500 and Nasdaq exchanges.
Reports indicated that the U.S. Department of Justice is exploring options, including potential measures to dismantle Google's operations, following a recent court ruling that identified monopolistic practices concerning the online search market. Precious metals also faced fluctuations, as gold fell by 0.9% to $2,485.90 per troy ounce, while silver decreased by 0.8%, trading at $27.57 per ounce..