Stocks Extend Gains as CPI Lands on Target and Cooler PPI Follows

U.S. stocks pushed higher after July's consumer price index matched expectations, rising 0.1% on the month and 3.4% from a year earlier. Core CPI, which excludes food and energy, increased 0.2% monthly with the annual rate at 2.5%, easing fears that the recent oil surge had reignited broader inflation. The S&P 500 and Nasdaq closed higher Wednesday, and futures pointed to further gains Thursday morning.

The disinflation story got a second data point Thursday as the producer price index came in slightly below forecasts. Treasury yields retreated from recent highs near 4.71%, and odds of a September Fed rate hike declined, supporting rate-sensitive names across the market.

For diversified portfolios, the tame inflation readings offer relief after a week dominated by Hormuz-driven oil worries. Attention now turns to next week's retail earnings, with Walmart set to report fiscal second-quarter results on August 20.