U.S. Stocks Rally on Eased Inflation Fears—S&P 500 Climbs to Month High
Market news 16 may
On Thursday, U.S. equity benchmarks closed broadly higher: the S&P 500 rose 0.41 % to its highest level in two and a half months, the Dow Jones Industrial Average gained 0.65 %, and the Nasdaq 100 added 0.08 %. June E-mini S&P futures climbed 0.48 %, while June E-mini Nasdaq futures were up 0.09 %. Markets drew support from signs of cooling price pressures and mixed economic data that eased worries over an imminent Fed tightening.
A key driver behind the riskon mood was a softerthanexpected Producer Price Index (PPI) print: April’s PPI fell 0.5 % month-on-month and was up 2.4 % year-on-year, versus forecasts of +0.2 % and +2.5 % respectively. Industrial production in the manufacturing sector also registered its largest six-month drop (–0.4 % m/m), while retail sales edged up 0.1 % ( beating a flat forecast). Together, these figures dampened inflation expectations and pushed the 10-year U.S. Treasury yield down 8.5 basis points to 4.451 %.
Labormarket data also provided ballast: weekly initial jobless claims held steady at 229,000 (versus a forecast of 228,000), and although autoex-auto retail sales rose just 0.1 % versus an expected 0.3 %, the overall retail figure surprised to the upside. Regional manufacturing surveys diverged—New York Fed Empire Index fell to –9.2, while the Philly Fed business outlook jumped from –11.0 to –4.0.
Fed Chair Jerome Powell offered a neutral assessment, reiterating the Fed’s steadfast commitment to its 2 % inflation target without telegraphing a clear shift in policy. Traders assign just an 8 % probability to a 25-basis-point rate cut at the June 17–18 FOMC meeting, reflecting caution amid mixed data.
Earnings season for Q1 is winding down: over 80 % of S&P 500 constituents have reported, with 77 % beating analysts’ estimates—the strongest “beat rate” since Q2 2024. Aggregate first-quarter earnings are up 13.1 %, well above the 6.6 % consensus at the start of the season. Yet full-year 2025 profit forecasts have been revised down to +9.4 %, from +12.5 % in January.
In individual stocks, Foot Locker surged over 85 % after Dick’s Sporting Goods agreed to acquire it at $24 per share. Other notable winners included Steris (+8 %), Cisco Systems (+4 %), and Deere & Co (+3 %). On the downside, Fiserv plunged 16 % after warning of slower growth, and UnitedHealth fell 10 % on reports of a Medicare fraud probe.
Overseas, European markets were mixed: the Euro Stoxx 50 rose 0.16 %, while Germany’s DAX and the U.K.’s FTSE 100 saw modest declines. Asia also retreated, with China’s Shanghai Composite down 0.68 % and Japan’s Nikkei 225 off 0.98 %. Yields on 10-year German and U.K. sovereign bonds fell 7.7 bp to 2.622 % and 5.3 bp to 4.660 %, respectively.
Looking ahead to Friday, investors will focus on April housing starts and building permits, plus the preliminary May University of Michigan consumer-sentiment index. Attention will also remain on trade-tariff developments and any fresh Fed signaling—factors set to steer the next leg in global markets.