US stocks rose on Thursday as investors looked past mixed inflation data and a jump in jobless claims, betting that the Federal Reserve will move ahead with an interest rate cut next week.
The Dow Jones Industrial Average added 115 points, or 0.2%. The S&P 500 advanced 0.3%, while the Nasdaq Composite gained 0.4%.
The August consumer price index showed a 0.4% monthly increase, above the 0.3% forecast, according to the Bureau of Labor Statistics.
The inflation release followed Wednesday’s producer price index report, which showed a 0.1% monthly decline and a 2.6% annual increase.
Labor market data added to the picture of a cooling economy.
Initial jobless claims for the week ended September 6 rose by 27,000 to a seasonally adjusted 263,000, the highest level since 2021 and well above the 235,000 forecast.
Despite the uneven data, traders remain confident the Fed will reduce its benchmark rate by a quarter point at its September 17 meeting, according to the CME FedWatch tool.
Odds of a larger half-point cut also edged higher.
Consumer prices inch up
US underlying inflation rose in line with expectations in August, leaving the Federal Reserve on course to cut interest rates next week.
The core consumer price index, which excludes food and energy, increased 0.3% from July, according to Bureau of Labor Statistics data released Thursday.
Core CPI is closely watched by Fed officials as a measure of underlying inflation.
The annual core rate held at 3.1%, above the central bank’s 2% target.
Including those components, headline CPI climbed 0.4%, the largest monthly gain so far this year.
Economists polled by Dow Jones had expected headline CPI to rise 0.3% on the month and 2.9% from a year earlier.
Prices for goods excluding food and energy accelerated, driven by higher costs for new and used vehicles, apparel, and appliances. In services, airfares posted the sharpest increase in more than three years.
The data indicate inflationary pressures remain, with tariffs imposed by President Donald Trump influencing prices of certain goods, while higher service costs add to overall persistence.
Despite that, the Fed is widely expected to deliver its first rate cut of the year at next week’s meeting, following a series of weaker labour market reports.
However, sustained strength in inflation could complicate the outlook for additional cuts at later meetings.
US jobless claims go up
Applications for US unemployment benefits rose sharply last week to the highest level in nearly four years, signalling potential weakness in the labour market as hiring slows.
Initial jobless claims increased by 27,000 to 263,000 in the week ended September 6, the highest reading since October 2021, according to Labor Department data released Thursday.
Economists surveyed by Bloomberg had expected 235,000 applications.
The data followed the September 5 employment report, which showed the US added just 22,000 jobs in August, extending the slowdown in hiring seen in recent months.
Economists note that uncertainty over President Donald Trump’s economic policies has contributed to employer caution in 2025.
While weekly claims can be volatile around holidays, including the Labor Day weekend, the four-week moving average—a smoother measure—climbed to 240,500, its highest level since June.
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