Traders work on the floor of the New York Stock Exchange.
U.S. stocks opened mostly flat on Thursday, but the Dow Jones Industrial Average managed to notch a new intraday record as investors shrugged off high inflation and jobless claims data.
The Dow slipped 40 points after hitting a new all-time high at the open. The S&P 500 lost 0.1% and the Nasdaq Composite lost nearly 0.2%.
Among the S&P sectors, health care and financial outperformed with gains of about 0.2% each, while tech and consumer discretionary stocks lagged. Goldman Sachs was the best-performing stock in the Dow while Visa shaved off about 20 points.
The Labor Department reported Thursday morning that initial jobless claims declined slightly last week as the U.S. labor market continues its recovery from last year’s recession. There were 375,000 claims last week, matching estimates. The prior reading came in at 385,000 claims.
The prices U.S. manufacturers and other businesses pay for labor, raw materials and other goods rose again in July. The government said its producer price index, excluding volatile food, trade services and energy components, rose 0.9% last month versus a forecast for a 0.5% gain.
The 10-year Treasury yield rose to 1.37% following the economic data. Goldman added 0.8%, Bank of America climbed 0.5% and JPMorgan rose 0.3%.
The update to producer price inflation came a day after the Labor Department said consumer prices surged 5.4% from a year earlier, for the month of July, and 0.5% from the previous month.
Core inflation, however, rose by just 0.3% in July, below the 0.4% increase forecast. Core inflation excludes energy and food prices and is considered a more reliable measure by economists since energy and food prices can be so volatile.
“Inflation has, at a minimum, paused,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “For both the headline and core figures, the monthly and annual numbers were stable or down from last month. Based on that data, inflation is certainly not on an unstoppable increase.”
Treasury yields dipped after the inflation report and as a 10-year note auction showed strong demand. Dallas Fed President Robert Kaplan told CNBC the Fed should start removing stimulus in October, adding to the decline in yields.
“The inflation story is more about isolated components, rather than general increases in prices, and even those components are showing signs of peaking,” McMillan said. “As we dig into the numbers, inflation is above where it has been but is showing signs of rolling over and returning to more comfortable levels.”
Dow member Disney will report earnings after the closing bell. The shares, down slightly in 2021, were down 0.2% during the regular session. Micron shares fell 5% after Morgan Stanley predicted a slowdown in the memory chip market and downgraded the stock.
On Wednesday, the Dow gained 0.6% to reach 35,484.97 and close at a new record. The S&P 500 rose 0.2% to an all-time high of 4,447.70. The Nasdaq Composite traded about 0.1% lower to 14,765.13.