US stocks had a monster day on Thursday, with all three major US indexes closing at all-time highs. Positive investor sentiment drove that surge. That optimism came on the heels of inflation data that landed squarely within expectations, helping stoke hopes for an interest rate cut by the Federal Reserve in the not-distant future.
Warner Bros Discovery, the corporate parent of CNN, had its stock jump 29%. This increase follows news reports indicating that Paramount Skydance is preparing to enter a competing offer for the company. This announcement was met with great excitement from investors and helped along the huge investor rally in the broader market. Moreover, the energy sector’s enthusiasm rubbed off on the broader markets, with the blue-chip S&P 500 up 0.85% and the technology-heavy Nasdaq up 0.72%.
Consumer prices rose in August, according to inflation data released on Thursday morning. Taken altogether this data is a near perfect close match to what Wall Street wanted to see. This alignment adds further conviction that the Federal Reserve will indeed cut rates at its next policy meeting. Bill Adams, chief economist at Comerica Bank, noted that there is a 95% chance the Federal Reserve will opt for a quarter-point cut when it convenes next week. He expressed that there still exists a 5% chance for a more hawkish half-point cut.
Skyler Weinand, chief investment officer at Regan Capital shared insights on the long-term implications of last week’s inflation report, saying,
“Thursday’s CPI was in line with expectations and will not derail the Federal Reserve’s expected rate cut at the September meeting.”
What’s clear is that investors are bullish on the space. They argue that the benefits of increased economic growth would far outweigh the more favorable borrowing costs. Yet despite this negative news, the broader market’s surging upswing is a positive indication of a developing confidence among investors, who are anticipating positive developments in monetary policy.