Wall Street rises toward more records on expectations for easier interest rates

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NEW YORK (AP) — Wall Street is ticking toward more records on Thursday following mixed U.S. data that likely keeps the path clear for the Federal Reserve to cut interest rates in order to boost the economy.

The S&P 500 rose 0.4% and was on track to set an all-time high for a third straight day. The Dow Jones Industrial Average was up 168 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.4% higher, coming off its own record.

Treasury yields swiveled a couple times in the bond market but remained relatively calm following the economic reports, which Wall Street took as cementing the case for a cut to rates at the Fed’s meeting next week.

One of the reports said more U.S. workers applied for unemployment benefits last week, an indication that the number of layoffs could be rising. It’s the latest discouraging signal on the job market, where hiring has slowed substantially. The labor market had seemed to be settling into a low-hire, low-fire state, but an increase in layoffs could put it in an even tighter vise.

The hope on Wall Street has been for a slowdown, but only for a precisely measured one. The job market has to be worrying enough to get the Fed to cut interest rates, which can give a kickstart to the economy and to prices for investments, but not so weak that it causes a recession.

The Fed has been hesitant to cut interest rates throughout 2025 because of the threat that President Donald Trump’s tariffs could make inflation worse. That’s because lower interest rates can push inflation even higher.

A report on inflation Thursday showed prices are continuing to rise faster for U.S. households than the Fed hopes, but only by the amount that economists expected. Consumers paid prices for food, gasoline and other costs of living that were 2.9% higher in August than a year earlier, a slight acceleration from July’s 2.7% inflation rate.

That’s above the Fed’s target of 2%, but traders believe not by enough to convince the Fed that inflation is the bigger problem now for the economy than the slowing job market. The Fed has just one tool to fix both problems, and moving interest rates to help one often hurts the other in the short term.

“Right now, inflation is a key subplot, but the labor market is still the main story,” according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

On Wall Street, Kroger rose 1.6% after the grocer reported a stronger profit for the latest quarter than analysts expected, though its revenue came up just shy of forecasts. It also raised the bottom end of its forecasted range for profit over the full year.

Opendoor Technologies jumped 34% after the company, which helps people buy and sell homes online, said it hired Shopify’s chief operating officer, Kaz Nejatian, as its CEO. It also announced a $40 million investment in the company by one of its founders and an investment firm tied to another founder.

In stock markets abroad, European indexes ticked higher after the European Central Bank left interest rates unchanged at its latest meeting. The European bank is on pause following an earlier set of cuts, and its president, Christine Lagarde, said future moves are “not on a predetermined path.”

France’s CAC 40 rose 0.8%, and Germany’s DAX returned 0.3%.

In Asia, indexes were mixed. Stocks jumped 1.7% in Shanghai but fell 0.4% in Hong Kong.

In the bond market, the yield on the 10-year Treasury eased to 4.02% from 4.04% late Wednesday.

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AP Writers Teresa Cerojano and Matt Ott contributed.