US stock market: Equities gain on in-line US inflation, Treasury yields dip

US stock market: The S&P 500 and Nasdaq closed at record highs and the global equity index advanced on Thursday after a much anticipated US inflation reading provided little surprise for relieved investors and helped push US Treasury yields lower.

The Nasdaq registered a record closing high for the first time in more than two years as Wall Street rebounded from the previous session's decline, which was due to investor jitters ahead of the US personal consumer expenditures (PCE) price index data.

But in the end, the PCE data, which is the Federal Reserve's preferred inflation gauge, showed the smallest annual increase in inflation in nearly three years, keeping the possibility of a June interest rate cut from the Fed on the table.

"Today's market movements really reflect a relief that we aren't seeing a re-acceleration in inflation. That's impacted fixed income markets as well as equity markets," said Sid Vaidya, US wealth strategist at TD Wealth.

Investors had been particularly anxious ahead of the PCE data after the most recent consumer price index (CPI) and the producer price index (PPI) data were hotter than expected.

"Markets are actually heaving a bit of a sigh of relief that we didn't get the same type of upside surprises we saw in the earlier inflation readings," said Mona Mahajan, senior investment strategist at Edward Jones in New York.

The Dow Jones Industrial Average (.DJI), rose 47.37 points, or 0.12 per cent, to 38,996.39, the S&P 500 (.SPX), gained 26.51 points, or 0.52 per cent, to a record closing high of 5,096.27.
The Nasdaq Composite (.IXIC), gained 144.18 points, or 0.90 per cent, to end at a peak of 16,091.92. Its previous record close was 16,057.44, hit in November 2021.

For the month, the S&P rose 5.17 per cent while Nasdaq gained 6.12 per cent and the Dow increased 2.22 per cent, with all three registering their fourth straight monthly gains. It was the S&P's longest streak of monthly gains since the five months ending July 2023.

MSCI's gauge of stocks across the globe (.MIWD00000PUS), was also eyeing a record close as it rose 2.73 points, or 0.36 per cent, to 760.86.

The STOXX 600 <.STOXX> index had ended unchanged while the German DAX (.GDAXI), climbed 0.4 per cent to a fresh all-time high after data showed cheaper energy prices slowed inflation down to 2.7 per cent in February.

Elsewhere in Europe, French consumer prices rose at a slower pace but slightly higher than forecasts, while in Spain annual inflation dropped but was in line with expectations.

In US Treasuries, the yield on benchmark US 10-year notes fell 0.6 basis points to 4.268 per cent, from 4.274 per cent late on Wednesday while the 30-year bond yield fell 2.2 basis points to 4.3884 per cent. The 2-year note yield, which typically moves in step with interest rate expectations, was roughly flat at 4.6477 per cent compared with 4.648 per cent late Wednesday.

In currencies, the dollar index, which measures the greenback against a basket of major currencies, regained lost ground after earlier easing following the data, which soothed worries that price pressures could be seeing a renewed uptick.

Against the Japanese yen , the dollar weakened 0.47 per cent to 149.96 yen after a Bank of Japan (BOJ) official hinted at the need to exit ultra-easy monetary policies.
The dollar index gained 0.17 per cent at 104.11, with the euro down 0.28 per cent at $1.0806.

In commodities, oil prices slipped after US data sent mixed signals about the outlook for crude demand from the world's top economy. US crude settled down 0.36 per cent to $78.26 a barrel and Brent finished at $83.62 per barrel, down 0.07 per cent. In precious metals, gold scaled a one-month high, boosted by the dollar decline as traders switched their attention from the inflation data and to wait for commentary from Fed officials.

Spot gold added 0.43 per cent to $2,043.39 an ounce. US gold futures gained 0.5 per cent to $2,043.10 an ounce.