US equities rallied broadly on Thursday, with the S&P 500 crossing the 7,800 mark and setting a fresh intraday record, after July producer price index (PPI) data came in flat, undershooting economist forecasts. The market's advance was notable for its breadth, with advancers outnumbering decliners by more than two-to-one on both the New York Stock Exchange and the Nasdaq.
At midday, the S&P 500 was up 0.9% to 7,815, while the Nasdaq Composite gained 0.6%. The Dow Jones Industrial Average lagged, slipping 0.2% (down 123 points), reflecting a rotation away from some industrial names. Exchange-traded funds tracking the major indices, such as the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), the Invesco QQQ Trust (NASDAQ:QQQ), and the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA:DIA), all saw increased activity.
The rally's breadth was a key highlight. On the NYSE, 1,629 stocks advanced versus 825 decliners, a ratio of 1.97. On the Nasdaq, 2,287 gainers against 1,309 decliners resulted in a ratio of 1.75. Earlier data from Reuters had shown both ratios above 2.0. Within the S&P 500, about 66% of members were advancing, and eight of the 11 sectors were in positive territory. This broad participation suggests the market's strength is not solely dependent on a few mega-cap technology stocks, a positive sign for the sustainability of the rally.
The catalyst was a cooler-than-expected inflation report from the producer side. The Labor Department reported that final-demand producer prices were unchanged in July, while economists had anticipated a modest increase. On an annual basis, PPI slowed to 4.7% from 5.5% in June. The breakdown was mixed: goods prices fell 0.7%, aided by a 3.1% drop in energy costs, while services prices edged up 0.2%. The core measure, which excludes food, energy, and trade services, rose 0.4% for the month.
Bond markets reacted positively to the inflation data. The 10-year Treasury yield fell to 4.64% from 4.68% on Wednesday. Traders now assign a 34% probability to a September rate increase, down from about 50% two days earlier. Lower yields provided support for rate-sensitive sectors such as real estate and also eased pressure on technology valuations. Microsoft (NASDAQ:MSFT) rose 1.4%, Nvidia (NASDAQ:NVDA) added 0.6%, and Apple (NASDAQ:AAPL) gained 0.5% in earlier trading.
Oil prices provided an additional tailwind. Brent crude fell about 1.1% to $87.00 per barrel, as demand forecasts softened and US inventories increased. Lower oil prices can help reduce near-term inflation pressures, though geopolitical supply risks remain a concern.
Company-specific reactions were selective. Cisco Systems (NASDAQ:CSCO) fell 8.6% despite beating quarterly estimates, as margin concerns outweighed the headline results. This aligns with the view of Edward Jones strategist Brock Weimer, who notes that investors are rewarding spending only when profits are visible. Jefferies remains overweight on the AI sector, citing strong infrastructure earnings and sustained capital spending.
The S&P 500's climb to 7,800 comes just seven sessions after it first closed above 7,700, a sharp acceleration from the previous 100-point move that took 43 sessions. However, risks remain: core producer prices still rose 0.4% last month, oil prices can reverse quickly, and long-term yields remain elevated. Intraday breadth could also narrow before the close.
