Wall Street gains as inflation and jobless claims data ease concerns over the interest rate

As producer price inflation moderated on Thursday and weekly jobless claims rose, U.S. stock indexes rose on Thursday, which brought relief to investors worried about how far the Fed is likely to hike interest rates in order to keep prices from rising too fast.

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Earlier this month, the Labor Department released a report that indicated producer prices unexpectedly fell in March, as the price of gasoline declined and there were signs that inflation was subsiding among producers.

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In addition to that, data showed that the number of Americans filing new claims for unemployment benefits increased more than expected last week, providing further evidence that labor market conditions are beginning to loosen up.

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"The Fed's policymakers will find this to be a very positive indicator that inflation is easing and dropping rather sharply. Jobless claims are also another positive sign for the Fed," said Peter Cardillo, chief market economist at Spartan Capital Securities.

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"Consumer and producer inflation are both heading south in the right direction, even though it is higher than expected... Still, it is good news and it will be an important factor to consider when it comes to the Fed ending its tightening cycle."

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In recent days, the S&P 500 (.SPX), the benchmark index for U.S. stocks, has traded in a narrow range, as investors assess the path for U.S. interest rates in light of the recent banking crisis and a selloff in March.

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After data showed that consumer prices in March rose at a slower pace than expected, Wall Street closed lower on Wednesday. Nevertheless, core prices remained steady and supported the case for the Federal Reserve to raise interest rates in May by 25 basis points.

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Following the release of Thursday's data, investors mostly stayed with their expectations of a 25-bps hike.

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Treasury yields in the United States fell, which boosted rate-sensitive growth stocks on the market. As a result, Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O), and Alphabet Inc (GOOGL.O) showed gains of nearly 2% each.

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Some of the recent gains made by the industrial (.SPLRCI), financial (.SPSY), and energy (.SPNY) sectors have been lost in the economy-sensitive sectors.

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According to the minutes of the Fed's latest policy meeting, which were released on Wednesday, several policymakers considered pausing last month's rate increases due to concerns about a recession after the stress in the banking sector.

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Several of the nation's largest banks, including JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N), and Wells Fargo & Co (WFC.N), are scheduled to report quarterly results on Friday, and investors will closely monitor their results for any clues about the overall health of the industry.

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The S&P 500 companies, according to Refinitiv IBES data, are expected to report a 5.2% decline in profit in the first quarter, in what could be their lowest showing since the third quarter of 2020, according to analysts.

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The S&P 500 index of financial companies is expected to report a profit growth of 4.3% in the first quarter of 2019 for those companies that are part of the index.

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As of 9:43 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 18.09 points, or 0.05%, at 33,664.59, the S&P 500 (.SPX) was up 13.74 points, or 0.34%, at 4,105.69, and the Nasdaq Composite (.IXIC) was up 106.53 points, or 0.89%, at 12,035.87.

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The share price of Harley-Davidson Inc (HOG.N) fell 3.1% after the motorcycle manufacturer announced that Chief Financial Officer Gina Goetter was leaving the company at the end of April.

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It is interesting to note that advancers outnumbered decliners on the NYSE by a ratio of 2.00:1 and on the Nasdaq by a ratio of 2.22:1.

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In terms of the S&P 500, three new 52-week highs were recorded, and one new low was recorded, while on the Nasdaq, 29 new highs were recorded, along with 80 new lows.