Wall Street climbs closer to its record high as economic data yield no surprises

U.S. stocks pulled closer to their records on Thursday after a couple of reports on the economy that came in close to expectations.

The Standard & Poor’s 500 rose 0.7% and climbed back within 1.3% of its record set in July after a shaky summer. It remains on track for a fourth winning week in the last five.

The Dow Jones industrial average added 0.6%, and the Nasdaq composite gained 1%.

Nvidia was the strongest force lifting the S&P 500 and rose an additional 1.9% to bring its gain for the week to nearly 16%. The chip company’s stock has stabilized recently after falling more than 20% during the summer on worries investors had taken it too high in their frenzy around artificial intelligence technology.

It and other major tech stocks helped offset a 12.4% slump for Moderna after the vaccine maker said it expects to break even in 2028, pushing out its earlier prediction of 2026. The company, whose sales have cratered in the aftermath of the COVID-19 pandemic, is also reducing its 2025-28 research and development investment by 20%.

Treasury yields held relatively steady in the bond market after reports on layoffs and inflation that included few surprises. The data did little to change the overriding belief in the market that the U.S. economy is slowing, along with inflation, and that the Federal Reserve will deliver a cut to interest rates next week in hopes of protecting the job market and preventing a recession.

One report said the number of U.S. workers applying for unemployment benefits last week ticked up, though it remains low relative to history. Another said prices charged at the wholesale level were 1.7% higher in August than a year before. That’s a slowdown from July’s inflation rate, but an underlying measure that economists see as a better predictor of future trends also ticked up more than expected.

The inflation data were similar to Wednesday’s report on prices at the U.S. consumer level. That kept traders betting the Fed will deliver a traditional-size cut of a quarter of a percentage point next week, instead of the larger half-point cut that some had earlier been expecting.

While lower interest rates help goose the economy and investment prices, they can also give inflation more fuel.

In the bond market, the yield on the 10-year Treasury edged up to 3.68% from 3.66% late Wednesday. It’s steadying a bit after sliding since April on expectations for coming rate cuts. That easing helped pull the average rate on a 30-year mortgage in the U.S. this week to its lowest level in 19 months, according to Freddie Mac.

Any rate cuts by the Fed would be the first in more than four years, as it’s been more focused on fighting inflation. Across the Atlantic, moves to protect the economy have already begun. The European Central Bank cut interest rates by a quarter of a percentage point on Thursday, the second time it’s done so to prop up economic growth.

Despite all the focus on how much the Fed will cut rates in September, the more important factor is how much in total the Fed will ultimately cut, and how much the market has already priced in, say strategists at UBS. Many traders are forecasting total cuts of more than 2 percentage points over the next year, reducing the federal funds rate’s current range of 5.25% to 5.50%, according to data from CME Group.

“Any divergence from this path — whether from resurgent inflation or recessionary risks — will likely be received poorly by the market,” according to the strategists led by Jonathan Golub.

On Wall Street, Kroger climbed 7.2% after reporting stronger profit for the latest quarter than analysts expected. The grocer’s revenue fell short of expectations, but it raised the floor of its forecast range for a key revenue measure for the full year.

Alaska Air Group rose 1.2% after raising its forecast for profit in the summer quarter. The airline said an important underlying measure of revenue will probably be higher than a year earlier. Fuel costs are also likely to be lower than expected.

American Airlines gained 1% after its flight attendants voted to approve a labor contract and avert a possible strike.

All told, the S&P 500 rose 41.63 points to 5,595.76. The Dow advanced 235.06 points to 41,096.77, and the Nasdaq jumped 174.15 points to 17,569.68.

In stock markets abroad, indexes rose across much of Europe. In Asia, Japan’s Nikkei 225 index was a standout and jumped 3.4%. It clawed back some of its sharp losses after a seven-day losing streak.

Choe writes for the Associated Press. AP writers Yuri Kageyama and Matt Ott contributed to this report.