Apple led a rebound in technology shares and thereby aiding all three major equity indexes on Thursday, as trade worries eased after China welcomed new talks with the United States.
Meanwhile, Dow Jones Industrial Average inched closer to its all-time high of January 26, closing at its highest since Feb. 1 and just 1.8 percent below the Jan. 26 close. The S&P 500 and the Nasdaq had already moved past their January peaks to record highs in prior weeks.
The S&P technology index was up 1.2 percent on the day, its largest percentage gain since August 2, due in part to Apple’s 2.4 percent gain.
The timing of a new round of trade talks remains unclear as Trump said the United States was under no pressure to make a deal with China.
Consumer prices rose less than expected in August and underlying inflation pressures also appeared to be slowing, a report from the U.S. Labor Department showed.
The trade-sensitive industrial index rose 0.5 percent. Caterpillar was up 0.9 percent and Boeing chalked up a gain of 0.6 percent.
Shares of Home Depot fell 1.2 percent, Lowe’s was down 1.4 percent and Beacon Roofing Supply dropped 5.9 percent as Hurricane Florence, which began lashing coastal North Carolina, was downgraded to a Category 2.
The S&P consumer staples index lost 0.4 percent as shares of Kroger weighed on the sector. Kroger slid 9.9 percent after the supermarket chain’s same-store sales missed estimates as customers were put off by changes in how it stocked merchandise.
Chipmakers bounced back from a slide on Wednesday, with the Philadelphia semiconductor index up 1.2 percent.
Qualcomm rose 4.0 percent after it said it would buy back about $16 billion of its stock.
Approximately 6.7 billion shares changed hands on the major domestic equity exchanges, as compared to the 6.1 billion share daily average for the past 20 trading days, according to Thomson Reuters data.
Consumer Price Index Surprises
Consumer prices rose less than expected during August as increases in gasoline and rents were offset by declines in healthcare and apparel costs. Underlying inflation pressures also appeared to be slowing.
According to a report released by the Labor Department Thursday morning, the Department’s Consumer Price Index increased 0.2 percent last month after a similar gain in July. In the 12 months through August, the CPI increased 2.7 percent, slowing from July’s 2.9 percent rise.
Excluding the volatile food and energy components, the CPI edged up 0.1 percent. The so-called core CPI had increased by 0.2 percent for three straight months. In the 12 months through August, the core CPI increased 2.2 percent after rising 2.4 percent in July.
Despite the moderation in price increases last month, inflation pressures are steadily building up, driven by a tightening labor market and robust economic growth.
The Federal Reserve tracks a different inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, for monetary policy. The core PCE price index increased 2.0 percent in July, hitting the U.S. central bank’s 2 percent target for the third time this year.
Minutes of the central bank’s July 31–Aug. 1 meeting published last month indicated “several participants commented that increases in the prices of particular goods, such as those induced by the tariff increases, would likely be one source of short-term upward pressure on the inflation rate.”
Last month, gasoline prices rebounded 3.0 percent after dropping 0.6 percent in July. Food prices edged up 0.1 percent, matching July’s rise. Food consumed at home was unchanged.
Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent in August after advancing by the same margin in the prior month. The rent index rose 0.4 percent.
Healthcare costs decreased 0.2 percent last month, matching July’s drop, as prices for doctor and hospital services fell. Apparel prices tumbled 1.6 percent, declining for a third straight month. Prices for new motor vehicles were unchanged last month and the cost of used cars and trucks increased for a third consecutive month.
Jobless Claims at 49-Year Low
According to a report released by the Labor Department Thursday morning, the number new claims for unemployment benefits fell unexpectedly last week, hitting the lowest level in 49 years, the result of a robust labor market.
Initial claims fell by 1,000 claims to a seasonally adjusted 204,000 claims for the week ended September 8, the lowest level since December 1969. Data for the prior week was revised to show 2,000 more applications received than previously reported.
Only claims for Maine were estimated last week. The claims data covered last Monday’s Labor Day holiday. Claims tend to be volatile around public holidays.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell by 2,000 claims last week to 208,000 claims, also the lowest level since December 1969.
The labor market is viewed as being near or at full employment. It continues to strengthen, with nonfarm payrolls increasing by 201,000 jobs in August and annual wage growth notching its biggest gain in more than nine years. Job openings hit an all-time high of 6.9 million in July.
The Federal Reserve’s Beige Book report, which was published on Wednesday, described the labor market as “tight throughout the country, with most districts reporting widespread shortages.”
Though there have been reports of some companies either planning job cuts or laying off workers because of trade tensions between the United States and its major trade partners, they have been partially offset by increased hiring in the steel industry.
However, there is a risk of widespread job losses if the Administration presses ahead with tariffs on nearly all Chinese imports. Trump last week threatened duties on another $267 billion worth of Chinese goods on top of a $200 billion tariff list that is awaiting his decision.
Thursday’s claims report also indicated the number of people receiving benefits after an initial week of aid fell by 15,000 claims to 1.70 million for the week ended Sept. 1, the lowest level since December 1973. The four-week moving average of the so-called continuing claims decreased by 8,250 claims to 1.71 million claims, the lowest level since November 1973.