In This Story
The Dow Jones Industrial Average and other indexes were steady on Thursday as the monthly inflation rate decreased in June, raising investors’ hope that the Federal Reserve will lower interest rates later this year.
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI), which is a broad measure of costs for goods and services across the U.S. economy, decreased by 0.1% in May, putting the 12-month rate at 3%. Core CPI, which excluded volatile food and energy items and closely monitored by the Fed, rose by 0.1% compared to a 0.2% increase in May, marking the second consecutive monthly increase. The annual increase for the core rate was the smallest since April 2021.
As per the report, the price index for gasoline dropped 3.8% in June, following a 3.6% decrease in May. Similarly, the energy index decreased 2% over the month, mirroring the previous month’s decline.
Indexes that rose in June included shelter, motor vehicle insurance, household furnishings and operations, medical care, and personal care. However, the indexes for airline fares, used cars and trucks, and communication decreased over the month.
The Dow Jones Industrial Average was up 0.17% to 39,790 points in the afternoon. The S&P 500, which reached another peak earlier this week, dropped 0.8%, while the tech-heavy Nasdaq shed 1.81%.
The most recent inflation data has raised investors’ hopes that the Fed will eventually lower interest rates this year. Since March 2022, the Fed has increased interest rates 11 times, and the current level has remained steady since July 2023. While in March 2022, the interest rate ranged from 0.25% to 0.50%, now it is 5.25% to 5.50%.