Wall Street opens higher as inflation data boosts rate-pause hopes

Wall Street's main indexes rose on Thursday as a keenly awaited report showed inflation was ebbing, fueling hopes the Federal Reserve could pause its monetary tightening, while Salesforce shares climbed on the company's upbeat revenue forecasts.

The Commerce Department report showed the personal consumption expenditures (PCE) price index, considered to be the Fed's preferred inflation gauge, climbed 3.3% in July, on an annual basis, meeting expectations of a 3.3% rise.

Excluding volatile food and energy components, the core PCE price index rose 4.2% in July, year-on-year, also in line with estimates.


Traders' bets on a pause in rate hikes at the Fed's September policy meet remained intact at 88.5%, while their odds for the central bank keeping rates unchanged in November stood at 51%, according to the CME Group's FedWatch tool.

"You're seeing inflation really decelerating, which is the narrative that we've had for a while now," said Tony Roth, chief investment officer at Wilmington Trust.

"There's a lot of data that's still to come (but) it's very possible the Fed won't move in November and that we're done with rate hikes."

In a further boost to markets, shares of Salesforce rose 5.1% on upbeat sales forecasts from the cloud-based software provider as it benefits from price hikes and a resilient demand.

The yield on the 10-year Treasury note inched lower, driving major growth stocks including Alphabet, Microsoft and Tesla up between 0.2% and 0.6%.

Nine out of the 11 major S&P 500 sectors were in the green, with communication services and information technology leading gains, up 0.4% each.

Keeping investor sentiment in check, the weekly jobless claims for the week ended August 26 fell to 228,000, compared with estimates of 235,000 claims.

The data follows a smaller-than-expected growth in private payrolls on Wednesday that signalled a softening labor market and drove the S&P 500 to a three-week closing high.

The index has fallen 1.4% in August due to declines in the first half of the month on fears of interest rates staying higher for longer.

At 9:41 a.m. ET, the Dow Jones Industrial Average was up 137.35 points, or 0.39%, at 35,027.59, the S&P 500 was up 8.73 points, or 0.19%, at 4,523.60, and the Nasdaq Composite was up 38.44 points, or 0.27%, at 14,057.75.

Among other stocks, Dollar General slumped 15.8% after the discount retailer cut its annual same-store sales forecast. Peer Dollar Tree's shares also fell 2.3%.

Victoria's Secret & Co dropped 4.0% after the company forecast a decline in its third-quarter sales.

Dismal manufacturing data from China sent U.S.-listed shares of Chinese companies JD.com and Baidu down 2.7% and 1.8%, respectively.

Advancing issues outnumbered decliners by a 1.69-to-1 ratio on the NYSE and by a 1.49-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and two new lows, while the Nasdaq recorded 33 new highs and 19 new lows.