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Wall St climbs as inflation, jobless claims data ease rate worries.

By Sruthi Shankar and Ankika Biswas

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 23, 2023. REUTERS/Brendan McDermid

(Reuters) - U.S. stock indexes rose on Thursday as a moderation in producer price inflation and jump in weekly jobless claims brought relief to investors worried about how far the Federal Reserve will hike interest rates to tame surging prices.

A Labor Department report showed producer prices unexpectedly fell in March as the cost of gasoline declined, and there were signs that underlying producer inflation was subsiding.

Data also showed that the number of Americans filing new claims for unemployment benefits increased more than expected last week, a further sign that labor market conditions were loosening up.

"We've got onto the top of the mountain of inflation and looks like we're coming down the other side," said David Russell, vice president of market intelligence at TradeStation.

"Inflation is coming down, but the process of Fed hiking rates is not necessarily over yet." The benchmark S&P 500 has traded in a tight range this month, having recovered from a selloff in March fueled by the recent banking crisis, as investors assessed the path for U.S. interest rates.

Wall Street closed lower on Wednesday after data showed consumer prices rose at a slower-than-expected pace in March, however, core prices remained sticky and supported the case for another 25-basis point rate hike by the Fed in May.

Investors mostly stuck to expectations of the 25-bps hike after Thursday's data.

U.S. Treasury yields fell, boosting rate-sensitive technology and other growth stocks. Apple Inc (NASDAQ:AAPL), Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT) rose between 1.3% and 3.0%, helping the Nasdaq outperform the other Wall Street indexes.

Communication services, consumer discretionary and technology shares led the gains among major S&P 500 sector indexes, while economy-sensitive stocks such as industrials were among the worst hit.

Minutes released on Wednesday from the Fed's latest policy meeting indicated concerns of a recession following the banking sector stress and that several policymakers considered pausing rate hikes last month.

Big U.S. banks JPMorgan Chase & Co (NYSE:JPM), Citigroup Inc (NYSE:C) and Wells Fargo (NYSE:WFC) & Co are scheduled to report quarterly results on Friday, and investors will watch them closely for details about the sector's overall health.

Analysts expect S&P 500 companies to record a profit decline of 5.2% in the first quarter, as per Refinitiv IBES data, in what could be their worst showing since the third quarter of 2020. Financial companies that are part of the S&P 500 are expected to report a profit growth of 4.3% in the first quarter.

At 11:50 a.m. ET, the Dow Jones Industrial Average was up 153.51 points, or 0.46%, at 33,800.01, the S&P 500 was up 26.24 points, or 0.64%, at 4,118.19, and the Nasdaq Composite was up 159.16 points, or 1.33%, at 12,088.50.

Delta Air Lines Inc (NYSE:DAL)'s shares fell 1.5% as the company missed first-quarter profit estimates.

Harley-Davidson Inc (NYSE:HOG) was down 4.% after the motorcycle maker said Chief Financial Officer Gina Goetter was leaving the company at the end of April. Advancing issues outnumbered decliners for a 1.95-to-1 ratio on the NYSE and a 2.38-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and one new low, while the Nasdaq recorded 49 new highs and 106 new lows.


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