U.S. Stocks Extending Upward Trend Following Inflation Data

Stocks have moved moderately higher during trading on Thursday, extending the upward trend seen over the past several sessions. The major averages have all moved to the upside, although buying interest has been somewhat subdued.

Currently, the major averages are off their highs of the session but still in positive territory. The Nasdaq is up 58.48 points or 0.4 percent at 14,077.79, the S&P 500 is up 9.41 points or 0.2 percent at 4,524.28 and the Dow is up 58.89 points or 0.2 percent at 34,949.13.

The strength on Wall Street partly reflects recent upward momentum, which has propelled the major averages to a four-session winning streak.

Positive sentiment was also generated in reaction to a Commerce Department report showing consumer price growth in the U.S. accelerated in line with economist estimates in the month of July.

The Commerce Department said the annual rate of consumer price growth increased to 3.3 percent in July from 3.0 percent in June. The faster growth matched expectations.

The reading on inflation also showed consumer prices rose 0.2 percent on a monthly basis in July, matching the uptick in June as well as economist estimates.

The report also said the annual rate of growth by core consumer prices, which exclude food and energy prices, inched up to 4.2 percent in July from 4.1 percent in June. The modest increase also matched expectations.

Core consumer prices rose by 0.2 percent on a monthly basis in July after edging up by 0.2 percent in June, in line with estimates.

The readings on prices for personal consumption expenditures are said to be the Federal Reserve’s preferred gauges of inflation.

“The lack of an inflation surprise to the upside should be cheered by markets because it is unlikely to move the Fed’s bias towards leaving rates unchanged at their next meeting,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

He added, “Not only is the Fed unlikely to raise rates at the next meeting, they are unlikely to raise rates again this year as long as inflation continues to remain contained.”

With the more closely watched monthly jobs report looming, the Labor Department also released a report unexpectedly showing a slight decrease in first-time claims for U.S. unemployment benefits in the week ended August 26th.

Sector News

Networking stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Networking Index up by 3.2 percent to its best intraday level in almost a month.

Ciena (CIEN) is leading the sector higher, soaring by 14.9 percent after reporting better than expected fiscal third quarter results.

Notable strength is also visible among computer hardware stocks, as reflected by the 1.2 percent gain being posted by the NYSE Arca Computer Hardware Index.

Semiconductor and retail stocks are also seeing some strength on the day, while gold stocks are moving lower along with the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while China’s Shanghai Composite Index fell by 0.6 percent.

The major European markets have also turned mixed on the day. While the German DAX Index is up by 0.7 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.1 percent.

In the bond market, treasuries are seeing modest strength after ending the previous session little changed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.7 basis points at 4.091 percent.