Wall Street Nears Fresh Records as Cooling Inflation, Lower Yields Lift Stocks

Wall Street ended Thursday at highs as easing inflation, falling oil prices and lower Treasury yields strengthened hopes that the Federal Reserve can avoid an interest-rate increase.

The S&P 500 rose 0.65 per cent to a record close of 7,798.99, while the Nasdaq Composite gained 0.81 per cent to 26,803.03. The Dow Jones Industrial Average added 0.13 per cent to 53,839.99. Early Friday trading remained subdued, with S&P 500 and Nasdaq futures slightly higher and Dow futures lower.

The rally followed July producer-price data showing wholesale prices were unchanged from June, while consumer inflation also showed signs of cooling. The combination reduced expectations of a September Fed hike. Investors were assigning about a 65 per cent chance of rates remaining unchanged, compared with roughly 50 per cent expectations for a hike earlier in the week.

Falling oil prices provided another boost. Cheaper crude can reduce fuel and transportation expenses, easing pressure on businesses and consumers and limiting the risk of renewed inflation. Brent crude fell Thursday, although geopolitical tensions kept energy markets volatile.

Lower Treasury yields also supported equities by reducing pressure on borrowing costs and making stocks relatively more attractive than bonds. Rate-sensitive areas such as real estate benefited, while technology and growth shares gained from improved expectations for financing conditions and future earnings.

Technology and semiconductor stocks led the advance. SanDisk surged 13.7 per cent, Micron rose 4.2 per cent, Microsoft gained nearly 1 per cent and Meta climbed 2.8 per cent. Communication services and real estate were among the strongest S&P sectors.

However, the rally was uneven. Cisco Systems fell 8.4 per cent despite upbeat results, as investors focused on margins and future performance. Tapestry plunged more than 16 per cent on weak revenue expectations, while energy, healthcare, industrial and materials shares lagged.

The latest moves show that Wall Street’s record run is being driven by a mix of cooling inflation, softer yields and strong AI-related enthusiasm, but elevated inflation, geopolitical risks and demanding technology valuations remain risks.