Stocks drift near records as hot PPI tempers Fed rate-cut bets

U.S. stock indexes drifted as traders assessed a blend of record closes, resilient earnings, and inflation data that could shape the Federal Reserve’s policy path. On the heels of a session when the S&P 500 touched a fresh high, futures pointed to a cautious start as investors weighed hotter-than-expected wholesale inflation against signs that consumer inflation may be cooling. The market is positioned to react to the incoming stream of data and upcoming policy signals, with expectations centered on a 0.25 percentage point cut by the Fed in September, and some strategists suggesting a larger move if the labor market softens.

In Wednesday’s session the major averages closed near record levels. The S&P 500 rose to a record close of 6,466.58, nudging the intraday peak to 6,480.28, while the Nasdaq Composite also posted a new high at one point and finished near its own record territory. The Dow Jones Industrial Average pressed higher, ending the day with a substantial gain and remaining within striking distance of its all-time high. Premarket action on Thursday was mixed. Futures initially dipped after the release of the latest wholesale inflation data but then steadied, with...