Stocks closed mixed on Thursday as market participants struggled for direction after another better-than-expected inflation report. The Dow Jones Industrial Average rose at a positive flatline, while the S&P 500 Index dipped slightly lower and the tech-heavy Nasdaq Composite fell about 0.6%.
Here's how the market settled on Thursday:
S&P 500 Index (NYSE: SPY): -0.07% or -2.97 points to 4,207.27
Dow Jones Industrial Average (NYSE: DIA): +0.08% or +27.16 points to 33,336.67
Nasdaq Composite Index (NASDAQ: QQQ): -0.58% or -74.89 points to 12,779.91
Thursday's moves followed Wednesday's rally, which saw the Nasdaq rise nearly 3%, as investors breathed a sigh of relief that inflation may be slowing after reaching multiple 40 years highs.
The Bureau of Labor Statistics reported Thursday that wholesale prices fell for the first time in two years in July as a drop in energy prices slowed the pace of overall inflation. The institution's producer price index (PPI) fell 0.5% from June, surprising Wall Street, which expected prices to increase by 0.2% in July.
On an annual basis, the index rose 9.8%, marking the lowest rate since October 2021 and slowing from June's rate of 11.3%.
Beneath the headline, energy prices dropped 9% at the wholesale level and accounted for 80% of the total decline in goods prices. Core PPI, which excludes more volatile food, energy and trade services, increased 0.2% month-to-month in July, less than the 0.4% expected. Core PPI rose 5.9% from a year ago.
"Cooling prices paid by producers portend a further cooling for consumer prices, as producer prices are further up the inflation pipelines," said Jeffery Roach, chief economist at LPL Financial, quoted by CNBC. "We expect producer prices to ease as supply chains improve. It could take up to three months for improved supply chains to affect prices for the end consumer."
That drop in energy costs can be seen in the national average price for a gallon of gasoline falling below $4 on Thursday for the first time since March, according to AAA. Back in June, Americans paid a record average of $5.02 per gallon, unadjusted for inflation.
This better-than-expected inflation report followed Wednesday's consumer price index (CPI) report that showed no change in consumer prices month-to-month for July and a lighter increase of 8.5% over the prior year.
Elsewhere, the Labor Department's weekly jobless claims report showed another 262,000 initial unemployment filings last week. First-time jobless claims have been steadily increasing in recent weeks as inflationary pressures and the Federal Reserve's interest rate hikes impact businesses.
For earnings, Disney (NYSE: DIS) shares rose on Thursday after the entertainment company posted better-than-expected earnings late Wednesday.
The company also reported a more-than-expected 14.4 million Disney+ subscribers, above the 10 million expected, and announced price increases for its streaming platforms alongside a new ad-supported Disney+ tier in the United States.
Looking ahead, earnings from Rivian Automotive (NASDAQ: RIVN) will be in focus aftermarket.