US stock market news: Dow Jones, S&P 500, Nasdaq rise up to 2% as inflation data feeds Fed pause hopes

The US stock market ended sharply higher on Thursday as economic data showed cooling inflation and a loosening labor market, fueling optimism that the Federal Reserve could be nearing the end of its aggressive interest rate hike cycle.

All three major U.S. stock indexes surged more than 1 per cent with interest rate sensitive megacaps including Apple Inc, Microsoft Corp and Amazon.com providing the most upside muscle and pushing the tech-heavy Nasdaq up nearly 2 per cent to its biggest one-day percentage jump in a month.

The Dow Jones Industrial Average (.DJI) rose 383.19 points, or 1.14 per cent, to 34,029.69; the S&P 500 (.SPX) gained 54.27 points, or 1.33 per cent, at 4,146.22; and the Nasdaq Composite (.IXIC) added 236.94 points, or 1.99 per cent, at 12,166.27.

Data released before the bell showed a steeper-than-expected cooldown in producer prices and new claims for jobless benefits coming in above consensus. Both signal that the Fed's hawkish barrage of rate hikes, which began over a year ago, is working as intended.

It comes on the heels of Wednesday's muted Consumer Price Index report, which cemented the likelihood of yet another 25 basis point rate hike at the conclusion of next month's Federal Open Market Committee policy meeting.

Analysts expect aggregate first-quarter S&P 500 earnings to come in 5.2 per cent below the year-ago quarter, a stark reversal from the 1.4 per cent year-on-year growth seen at the beginning of the quarter, according to Refinitiv.

Among the 11 major sectors of the S&P 500, all but real estate (.SPLRCR) ended the session higher, with communication services (.SPLRCL) and consumer discretionary (.SPLRCD) enjoying the largest gains, both jumping 2.3 per cent.

Advancing issues outnumbered decliners on the NYSE by a 2.71-to-1 ratio; on Nasdaq, a 2.55-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and one new low; the Nasdaq Composite recorded 69 new highs and 140 new lows.

Volume on US exchanges was 10.40 billion shares, compared with the 11.51 billion average over the last 20 trading days.

With Reuters Inputs