The S&P 500 (+0.5%), Nasdaq Composite (+0.7%), and Dow Jones (-0.1%) are mostly trading higher shortly after noon, although stocks have given back part of their initial advance that pushed the S&P 500 to a new intraday record high and above the 7,800 level for the first time.
Stocks opened higher on another encouraging inflation report and falling oil prices, which created a supportive backdrop. Following yesterday’s Consumer Price Index report, softer producer-price data further reduced expectations of additional Fed monetary-policy tightening. According to the CME FedWatch tool, the probability of a 25-basis-point rate hike in September fell to 34.4% from 55.0% a week earlier.
A more favorable policy backdrop drove a broad advance at the open, led by mega-cap and technology stocks. The information technology sector (+1.0%) is among the market leaders, supported by a 2.0% gain in the PHLX Semiconductor Index. In particular, memory stocks are rising after positive developments at Sandisk’s investor day (+15.4%). Super Micro Computer (+5.6%) continues to climb after yesterday’s post-earnings jump, while weakness in Cisco (-9.2%) following its earnings report is weighing heavily on the Dow.
While the communication services sector (+1.1%) continues to advance solidly, the consumer discretionary sector (+0.1%) has given back most of its initial gain. The energy sector (-0.3%) is lagging, and the materials (-0.6%) and industrials (-0.3%) sectors are also posting declines.