Dow opens higher as softer PPI and falling oil lift Wall Street mood

US stocks opened higher on Thursday as easing oil prices and softer-than-expected producer inflation boosted investor sentiment, strengthening expectations that the Federal Reserve will leave interest rates unchanged at its September policy meeting.

The Dow Jones Industrial Average gained about 99 points, or 0.19%, while the S&P 500 rose 0.33%. The Nasdaq Composite added 0.29%.

Markets also reacted to a sharp pullback in crude oil prices after six consecutive sessions of gains.

Brent crude fell about 2% to around $87 a barrel, while US West Texas Intermediate crude dropped roughly 2% to about $81.3 a barrel as investors assessed weaker demand projections, rising US crude inventories and continued uncertainty surrounding the conflict between the United States and Iran.

Although tensions in the Middle East remained elevated and shipping through the Strait of Hormuz continued to operate well below normal levels, lower oil prices helped improve overall risk appetite.

Softer inflation data strengthens Fed pause expectations

Investor focus remained firmly on inflation after the latest Producer Price Index (PPI) report came in below expectations.

Producer prices were unchanged in July on a monthly basis, compared with economists' expectations for a 0.2% increase.

Core PPI, which excludes food and energy, rose 0.2%, slightly below forecasts of 0.3%.

The weaker wholesale inflation report followed Wednesday's consumer price index data, which showed headline inflation rising 0.1% in July, matching expectations.

Together, the two reports reinforced expectations that inflationary pressures remain contained despite elevated energy prices.

Following the latest inflation data, traders increased expectations that the Federal Reserve will leave interest rates unchanged at its September meeting. Fed funds futures implied roughly a 65% probability of a pause, up from about 60% before the PPI report.

Meanwhile, weekly jobless claims increased modestly, suggesting the US labor market remains relatively stable despite signs of slower economic activity.

Oil retreat offsets geopolitical concerns

Crude prices declined after investors weighed weaker global demand forecasts alongside higher US crude inventories.

The recent drop followed six straight sessions of gains driven by geopolitical tensions in the Middle East. Despite the pullback, uncertainty surrounding the US-Iran conflict continued to influence energy markets.

Reports indicated that negotiations between Washington and Tehran over a permanent resolution remain stalled, while shipping activity through the Strait of Hormuz stayed significantly below pre-conflict levels.

Even so, investors appeared encouraged by falling oil prices, viewing lower energy costs as supportive for inflation and broader equity markets.

Earnings drive individual stock moves

Corporate earnings continued to influence trading across sectors as the reporting season entered its final stages.

Cisco Systems fell 9.2% in trading despite forecasting fiscal 2027 revenue above Wall Street expectations, with investors appearing disappointed by other aspects of the company's quarterly update.

AI chip designer Cerebras declined more than 13% after reporting quarterly revenue below analyst estimates, reversing part of the stock's recent rally.

PC manufacturers Dell Technologies and HP gained after Lenovo reported stronger-than-expected quarterly results, boosting sentiment across the personal computer industry.

Elsewhere, insurance marketplace Accelerant surged nearly 44% after private equity firm Thoma Bravo agreed to acquire the company in an all-cash transaction valued at more than $4 billion.

Luxury accessories company Tapestry dropped almost 16% despite issuing an upbeat annual earnings outlook.

With more than 430 S&P 500 companies having already reported quarterly results, earnings season is beginning to wind down.

Investor attention is now expected to shift toward upcoming economic data and Federal Reserve policy expectations as markets assess the outlook for interest rates and corporate growth during the remainder of the year.