The Dow Jones Industrial Average rose 93 points, or 0.2%, as of 11:10 a.m. Eastern, signaling a positive start to the day for investors.
Consumer prices also showed signs of improvement, with a 2.6% increase in May compared to a year ago, according to the latest personal consumption expenditures index (PCE). This is a slight decrease from the 2.7% reading in April and a significant drop from the peak reading of 7.1% two years ago.
The PCE is the Federal Reserve’s preferred measure of inflation, and the latest data is encouraging for economists and investors who are hoping for rate cuts to ease pressure on the market and borrowers. Wall Street is anticipating that the Fed will begin cutting interest rates at its meeting in September.
In the bond market, Treasury yields were mixed following the news of easing inflation. The yield on the 10-year Treasury rose to 4.34% from 4.30%, while the yield on the two-year Treasury fell to 4.71% from 4.72%.
The Fed had previously raised interest rates to their highest level in over two decades in an effort to control inflation. Other measures of inflation, including the consumer price index, have also shown signs of easing pressure on prices.
Despite the positive economic indicators, consumers are still feeling the effects of inflation, and recent data has shown a weakening in spending, which is impacting economic growth. The Fed’s goal is to slow economic growth enough to control inflation without causing a recession.
In the midst of these economic developments, athletic wear company Nike saw a significant drop in its stock price, tumbling 19.5% after missing revenue targets and cutting its full-year sales guidance. This news also affected other athletic apparel companies, with Foot Locker, Skechers, and Under Armour all experiencing declines in their stock prices.
Overall, retailers, especially those focusing on discretionary items, have been warning about a slowdown in consumer spending. The latest government retail sales report showed minimal growth in consumer spending from April to May.
As the market continues to react to economic data and corporate earnings reports, investors will be closely watching for updates on job openings and overall employment in the coming weeks.
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AP business writers Yuri Kageyama and Matt Ott contributed to this report.
