Stocks Edge Higher on Cooling Inflation as Oracle Gains and Tariff Fears Temper Optimism

U.S. stock indexes saw modest movements on Thursday after a favorable report on inflation. The S&P 500 gained 0.2%, coming within 2% of its all-time high, while the Nasdaq also rose 0.2%. The Dow Jones Industrial Average dipped slightly by 18 points. The report indicated that wholesale inflation was lower than expected, echoing a similar consumer inflation report from the previous day, which boosted investor sentiment.

Oracle’s Surge and Boeing’s Decline Shape Markets Amid Fed and Tariff Uncertainty

Oracle helped lift market spirits with a strong quarterly performance, reporting better-than-expected profit and revenue. Its stock surged 13.2% following the announcement, with CEO Safra Catz forecasting a significant increase in revenue for the upcoming fiscal year. However, gains were tempered by a 5.6% drop in Boeing’s stock after a fatal crash involving a Boeing 787 Dreamliner operated by Air India.

The bond market reflected optimism about the inflation outlook, with the yield on the 10-year Treasury note falling to 4.38%. Analysts interpreted the soft inflation data as a signal that the Federal Reserve may cut interest rates later this year. However, the Fed has remained cautious due to economic uncertainties, especially surrounding President Donald Trump’s tariffs, which have contributed to inflation and recession fears.

Labor Market Weakness and Trade Uncertainty Fuel Expectations for Future Fed Rate Cuts

In addition to inflation, jobless claims added to the case for lower interest rates. More Americans filed for unemployment benefits than expected, keeping jobless claims at their highest level in eight months. Strategists like Thierry Wizman from Macquarie argue that, if not for tariff-related uncertainties, the Fed might have already resumed interest rate cuts based on the current inflation and labor market data.

Tariffs remain a key source of volatility. Although many are currently suspended to allow for trade negotiations, President Trump’s comments hinting at a more aggressive stance added fresh uncertainty. Global markets showed mixed results in response, with Europe and Asia posting mostly minor changes. Notably, Hong Kong’s Hang Seng index fell 1.4%, though it still shows a robust 20% year-to-date gain, outpacing the S&P 500’s sub-3% growth.