U.S. equity markets set new record highs on Wednesday after the release of inflation figures bolstered expectations of an imminent rate cut.

In late morning trading, the Dow Jones advanced 0.6% to 39,805.8 points, just 80 points shy of its previous all-time high of 39,889.805.8 points, just 80 points shy of its previous all-time high of 39,889.

The S&P 500, up 0.4% at 5,288.5 points, and the Nasdaq Composite, up 0.9% at 16,661.3 points, set new all-time highs in early trading.

Investors welcomed the announcement, earlier in the morning, of a 3.4% year-on-year rise in the consumer price index (CPI) in April, an annual rate 0.1 points lower than in March.

Excluding food and energy, the core retail price index also fell, down 0.2 points on March to 3.6% last month.

These data, which attest to a steady decline in inflation, reinforce the scenario of a rate cut by the Federal Reserve in September.

In a reaction note, CPRAM's teams find these figures reassuring, but not likely to influence the Fed's caution.

The markets are reassured by the fact that underlying inflation has resumed its downward trend, but this is essentially due to favorable base effects", says Bastien Drut, head of strategy and economic research at the asset manager.

The statistics not only pushed down the dollar against the euro, which climbed back to 1.0865, but also pushed down Treasury yields.

The yield on the 10-year bond dropped more than seven basis points to 4.37%, the lowest in over a month, reacting to lower-than-expected inflation figures.

Retail sales and the Empire State index were the other two statistics of the day.

Retail sales remained stable at a sequential rate in April, at $705.2 billion, whereas the market was expecting them to rise slightly.

As for the Empire State index measuring industrial activity in the New York area, it came out at -15.6 in May, compared with -14.3 last month, meaning that the pace of contraction in activity has increased slightly.

These indicators, which point to a slowing trend in US growth, also argue in favor of further support measures from the Fed.

Copyright (c) 2024 CercleFinance.com. All rights reserved.