Wall Street moved higher for a second consecutive session as encouraging inflation data and another round of strong corporate earnings reinforced investor confidence heading deeper into earnings season.
The S&P 500 gained 0.4%, the Nasdaq Composite climbed 0.6%, and the Dow Jones Industrial Average added 0.3%, leaving the major indexes within striking distance of their record highs.
The day’s biggest economic news came from the Producer Price Index (PPI).
Wholesale inflation came in cooler than economists expected, adding to Tuesday’s encouraging Consumer Price Index report. The back-to-back inflation readings strengthened the view that price pressures continue to moderate, easing concerns that the Federal Reserve may need to tighten monetary policy further in the near term. Treasury yields declined following the report, providing additional support for equities.
Earnings season also continued to deliver positive surprises.
BlackRock reported better-than-expected quarterly results, sending its shares up more than 6% after announcing that assets in its iShares ETF business surpassed $6 trillion. Morgan Stanley also exceeded expectations, reinforcing the message that large financial institutions continue to benefit from resilient capital markets and strong client activity.
Not every sector participated in today’s rally.
Semiconductor stocks traded mixed as investors rotated into financials and consumer-focused companies after last week’s strong gains in AI-related names. Even so, enthusiasm surrounding artificial intelligence remains intact as investors look ahead to earnings from major technology companies later this month.
Oil prices remained elevated because of ongoing tensions in the Middle East, reminding investors that geopolitical risks have not disappeared. Yet today’s market demonstrated an important principle:
When inflation improves and corporate earnings exceed expectations, investors tend to focus on fundamentals rather than fear.
As earnings season continues, individual company results will likely become the primary driver of market performance.
The businesses that can deliver strong revenue growth, expanding margins, and clear evidence that AI investments are generating real returns are likely to remain the market’s long-term winners.
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