Oil prices fell on Thursday as traders processed the latest inflation data and a wave of corporate earnings reports. The Dow Jones Industrial Average rose 0.21%, the S&P 500 gained 0.21%, and the Nasdaq Composite edged up 0.13%.
Cisco Systems was a major drag on the market, with its shares falling about 7% after reporting quarterly results that missed analyst expectations. Cerebras and Coherent also declined following their overnight earnings releases, with Cerebras tumbling 15% and Coherent dropping 4.4%.
Brent crude futures fell 2% to $87.04 per barrel, while West Texas Intermediate (WTI) crude retreated 2% to $81.32 per barrel. Traders are weighing the impact of weakening oil demand against the ongoing U.S.-Iran conflict.
On Wall Street, another key inflation reading arrived: the July Producer Price Index (PPI), which measures raw material costs for wholesalers, was flat month-over-month. Economists surveyed by Dow Jones had expected a 0.2% increase. Excluding volatile food and energy prices, core PPI rose 0.2% month-over-month, slightly below the 0.3% forecast.
This weaker-than-expected PPI report followed the release of the Consumer Price Index (CPI) data, which met market expectations. July CPI rose 0.1% month-over-month, in line with forecasts. The moderate inflation data lifted the S&P 500, marking the benchmark's first gain in three sessions, while traders scaled back expectations for a Federal Reserve rate hike in September.
With energy prices remaining elevated, the tame U.S. inflation data gives the Fed more room to keep rates unchanged. "The latest report provides the Fed with enough operational flexibility, and if they decide not to raise rates in September, they have the data to support it," said Richard Flax, Chief Investment Officer at Moneyfarm. "Given the recent oil price shock, this inflation data is not bad."
Jose Torres, Senior Economist at Interactive Brokers, noted: "However, the mainstream consensus still leans toward the Fed raising rates in October or December. Policymakers need time to assess the various economic signals related to the central bank's dual mandate."
Across the Atlantic, the European Stoxx 600 index added 0.2%. Asian markets closed with mixed results: South Korea's KOSPI surged 3.6%, entering bull market territory; China's CSI 300 fell 0.57%; Japan's Nikkei 225 gained 1.16%; and Australia's S&P/ASX 200 slipped 0.23%.
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