By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks extended recent gains to end higher on Thursday, with the Nasdaq rising more than 1% for a second straight day, as data showed the annual increase in U.S. producer inflation was the smallest in nearly three years.
The data provided more evidence that inflation pressures were subsiding. Wednesday's CPI report showed U.S. consumer prices registered their smallest annual increase in more than two years.
The reports have helped to support the view the Federal Reserve will stop hiking rates after an expected 25 basis points rate increase later this month.
"PPI is another confirmation this week that inflation continues to trend in the right direction even as we see better overall labor market and consumer data. That is a good sign," said Mona Mahajan, senior investment strategist at Edward Jones.
In the 12 months through June, the producer price index climbed 0.1%. That was the smallest year-on-year gain since August 2020 and followed a 0.9% increase in May.
Technology-related shares provided the most support to the S&P 500, and an index of tech-focused shares including megacaps gained 2.7% and registered a record high close.
The Dow Jones Industrial Average rose 47.71 points, or 0.14%, to 34,395.14, the S&P 500 gained 37.88 points, or 0.85%, to 4,510.04 and the Nasdaq Composite added 219.61 points, or 1.58%, to 14,138.57.
U.S. chip stocks also rallied, with Nvidia (NASDAQ:NVDA) jumping to a record high during the session and the Philadelphia semiconductor index rising 2%.
Offsetting some of the day's upbeat tone, a separate report showed weekly jobless claims unexpectedly fell last week, indicating that the labor market remains tight.
Focus also is shifting to the second-quarter U.S. earnings season kicking off this week. Shares of JPMorgan Chase (NYSE:JPM) ended up 0.5% ahead of its quarterly results due before the opening bell Friday.
"We might have another quarter here where the positive sentiment will continue," said Alan Lancz, president of Alan B. Lancz & Associates Inc. in Toledo, Ohio.
"As long as expectations and guidance are in line, that's what a lot of institutional investors will be looking at."
Delta Air Lines (NYSE:DAL) ended near flat after rising on news it lifted its full-year profit outlook, citing a relentless post-pandemic travel boom.
PepsiCo (NASDAQ:PEP) shares jumped 2.4% after the company raised its annual revenue and profit forecasts for the second time.
Among the day's other gainers, shares of Google parent Alphabet (NASDAQ:GOOGL) Inc shot up 4.7%. It said it was rolling out its artificial-intelligence chatbot Bard in Europe and Brazil, easing worries about overseas regulatory issues.
Recent weakness in the U.S. dollar could be among positives for U.S. multinational companies for future earnings, strategists said.
Volume on U.S. exchanges was 10.82 billion shares, compared with the 11.11 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 2.90-to-1 ratio; on Nasdaq, a 1.93-to-1 ratio favored advancers.
The S&P 500 posted 51 new 52-week highs and one new low; the Nasdaq Composite recorded 135 new highs and 39 new lows.