Wall Street Records: Dow Jones Breaks 40,000 as Inflation Decelerates and Rate Cut Probabilities Rise

The S&P 500 index, Nasdaq and Dow Jones reached record levels this week. The Dow surpassed the 40,000 level for the first time.

Consumer prices rose 0.3% in April from March, slightly below the consensus forecast of 0.4%, while core inflation rose 0.3% as expected. On a year-over-year basis, prices rose 3.4% in April, down from 3.5% in March, while core inflation slowed to 3.6% from 3.8%. Although the data improved, it is still well above levels that would give the Fed the confidence it needs to cut rates soon. Investors concerned about inflation were encouraged by a weak retail sales report, which showed that sales were flat in April from March. The odds of a September rate cut rose to 85% after the data, up from 75% previously. However, in statements following the data release, Fed officials showed no rush to tighten policy.

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