Three major US stock indexes moved higher on Thursday, with the S&P 500 reaching a new all-time high following two consecutive days of gains. The annual US Producer Price Index (PPI) for July came in at 4.7%, the lowest since March and below the market consensus of 4.9%. Following the data release, money market futures implied the probability of a Federal Reserve interest rate hike in September fell to under 40%.
At the closing bell, the Dow Jones Industrial Average added 69.72 points, or 0.13%, to finish at 53,839.99. The Nasdaq Composite surged 214.54 points, or 0.81%, to 26,803.03. The S&P 500 gained 50.49 points, or 0.65%, closing at 7,798.99. In the tech sector, Micron Technology (MU.US) rose 4%, SanDisk (SNDK.US) jumped 13.6%, and SK Hynix (SKHY.US) advanced 7%. The Nasdaq Golden Dragon China Index fell 1.85%, with Alibaba (BABA.US) dropping 2%.
European markets were mixed. Germany's DAX 30 slipped 37.69 points, or 0.14%, to 26,308.60. The UK's FTSE 100 declined 63.95 points, or 0.59%, to 10,769.20. France's CAC 40 lost 24.38 points, or 0.28%, to 8,650.56. The Euro STOXX 50 edged up 13.96 points, or 0.21%, to 6,547.95. Spain's IBEX 35 dropped 25.25 points, or 0.12%, to 20,179.15. Italy's FTSE MIB added 26.34 points, or 0.05%, to 53,725.00.
Asian markets showed gains. Japan's Nikkei 225 rose 1.16%, while South Korea's Kospi Composite Index surged 3.56%.
The US Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.05% on the day, settling at 99.964 in late trading. In currency markets, the euro traded at $1.1529, up from $1.1521 in the previous session. The British pound changed hands at $1.3485, down from $1.3488. The dollar was at 159.51 yen, up from 159.49 yen. Against the Swiss franc, the dollar was at 0.8139, up from 0.8137. The greenback traded at C$1.3936, down from C$1.3947. The dollar was at 9.5684 Swedish krona, down from 9.5858.
In the cryptocurrency market, Bitcoin showed little movement, trading at $63,546.55 at the time of writing. Ethereum was up 0.7% to $1,891.51.
Oil prices declined. The front-month September contract for West Texas Intermediate (WTI) crude on the New York Mercantile Exchange fell $2.02 to settle at $81.25 per barrel, a drop of 2.43%. The October contract for Brent crude, the global benchmark, lost $1.91 to close at $87.07 per barrel, a decline of 2.15%.
In precious metals, spot gold was trading at $4,350.54 per ounce, while spot silver was at $64.377 per ounce.
US mortgage rates edge lower for first time in six weeks. Freddie Mac reported that the average rate on a 30-year fixed-rate mortgage fell to 6.67% from 6.69% the previous week, ending a five-week streak of increases. However, the rate remains near the highest level in over a year. The latest data suggests the US job market is cooling, and the inflationary impact from the Iran conflict may be weaker than previously anticipated. US price increases slowed for a second consecutive month in July, with energy, gasoline, and food prices all declining month-over-month. Core inflation metrics dropped to a five-year low. Combined with employment reports, markets believe the data is easing pressure on the Federal Reserve to raise rates in the coming months. Investors now see a 38% probability of a 25-basis-point rate hike in September, down from 48%. However, stalled negotiations over the Strait of Hormuz are fueling concerns about sustained high oil prices, while elevated interest rates and economic uncertainty continue to suppress housing demand. Data showed US home sales in July fell 4.1% from June, hitting their lowest level in nearly two years.
Trump imposes 100% tariff on certain drone imports. The White House issued a statement on Thursday stating that President Trump signed an executive order to address what it called a national security threat from imported drones and their components, including measures to strengthen the US drone industry and supply chain. The order imposes a 100% ad valorem tariff on drones of a certain size or with sensitive capabilities, as well as some key components. This includes drones with a maximum takeoff weight exceeding 25 kilograms and those equipped with thermal imaging capabilities. A 25% ad valorem tariff will be placed on smaller drones without specific capabilities and other drone components. The order also specifies a 15% tariff on drones and components from the European Union, Japan, Liechtenstein, South Korea, and Switzerland. A 10% tariff will apply to drones from the UK, provided the vast majority of their hardware, software, and technology originates from these countries and regions or the US. The tariffs will take effect 21 days after the order's signing. For drone components not classified as highly sensitive, the tariffs will become effective 180 days after the order's signing.
Federal Reserve pauses Treasury purchases for reserve management purposes. The Federal Reserve announced on Thursday that it will suspend its Reserve Management Purchases (RMP) of US Treasuries for the next month, indicating that the level of reserves in the banking system has reached a level the Fed deems appropriate. The New York Fed stated that during the operational period ending September 14, it will halt RMP purchases but will continue to reinvest approximately $17 billion in maturing principal. This move suggests that despite potential pressure on market liquidity from an increase in the US government's cash balance, the Fed remains confident in the stable functioning of funding markets. For most of July, the Secured Overnight Financing Rate (SOFR) was below the Interest on Reserve Balances (IORB) rate. As of August 12, the SOFR fixing rate was 3.62%, 3 basis points below the IORB. The Fed emphasized that this adjustment is purely an operational change in its reserve management program and does not signify a shift in monetary policy stance or balance sheet strategy.
US initial jobless claims edge up, requiring more data to confirm labor market stability. The number of Americans filing for unemployment benefits for the first time rose after hovering near historic lows. The Labor Department reported on Thursday that initial jobless claims for the week ending August 8 increased by 9,000 to 209,000. The median estimate from economists was 202,000. The increase in claims may reflect typical summer volatility, a period when seasonal employment patterns and holiday schedules can affect the data. Economists are waiting for several more weeks of data before reassessing the recent stability of the labor market.
Fed's Hammack: The Fed must raise rates now. Federal Reserve official Hammack recently stated, "The Federal Reserve must raise interest rates now because current policy is not restrictive enough, and inflation is rising due to recent shocks. Excessively rapid growth could put additional pressure on prices. Raising rates may be painful, but we cannot allow economic growth and investment to be so fast that the economy overheats. Current inflation is widespread, not confined to certain sectors. It is very important that the Fed is held accountable for inflation data."
Reports of Silver Lake approaching Workday send shares soaring nearly 30%. Shares of Workday (WDAY.US) surged as much as 30% in intraday trading on Thursday, triggering multiple trading halts, following reports that Silver Lake is in discussions to acquire the company. Sources familiar with the matter said the two parties have been in contact for some time. The news pushed Workday's market capitalization above $50 billion. The stock had been under pressure amid concerns that artificial intelligence would reshape the software industry landscape. If the acquisition is finalized, it could signal a return of capital interest in software assets. Jefferies analyst Till believes the deal is feasible given the close relationship between Workday CEO Busrie and Silver Lake. On the fundamentals front, Workday reported better-than-expected quarterly results in May and raised its guidance, stating that AI-related trends are bringing tangible benefits.
Google releases Gemini 3.7 Flash, but flagship model remains elusive. Google has released its next-generation AI model, Gemini 3.7 Flash, which focuses on improved code generation and debugging capabilities. However, the company has still not provided a concrete release date for its flagship model, Gemini 3.5 Pro, which has been delayed multiple times due to slower-than-expected development progress. Google claims that Gemini 3.7 Flash can produce code that is closer to deployable standards on its first try, reducing the need for developers to make repeated revisions and lowering inference costs. The new model will also support the AI productivity assistant Gemini Spark and will include new security measures against malicious attacks and risks of misuse in the chemical, biological, radiological, and nuclear domains. The rapid iteration of the Flash series has not alleviated market concerns about Google's competitiveness in AI, and the continued delay of Gemini 3.5 Pro is keeping investors focused on the execution of its AI roadmap. Google CEO Sundar Pichai said the company is accelerating its model iteration and has allocated significant computing resources to train the next-generation Gemini 4 model.
Anthropic meets with potential investors ahead of IPO, $2 trillion valuation not an official target. AI unicorn Anthropic is holding preliminary meetings with potential investors as it prepares for what could be a record-breaking IPO. According to sources familiar with the matter, the discussions remain at a high level and have not yet touched on specific financial data or valuation. Anthropic CFO Krishna Rao is leading these meetings, with discussions centered on the Claude series of AI models, the coding assistant Claude Code, the enterprise market positioning, the management team, and product iteration. The company confidentially filed for an IPO with the US Securities and Exchange Commission in June but has not yet announced a formal timeline. Anthropic completed a funding round in late May at a valuation of $965 billion, surpassing OpenAI's valuation of $852 billion during the same period. The company disclosed that its annualized revenue run rate has already exceeded $47 billion. Some investors predict its IPO valuation could reach $2 trillion, but the company has not confirmed this as an official target. In the competitive landscape, OpenAI has also confidentially filed its IPO documents but has not yet started pre-IPO meetings with investors. Sources indicate that OpenAI's annualized revenue has surpassed $40 billion, roughly doubling from the end of 2025. This performance has significantly boosted the company's confidence in its IPO preparations. In recent months, OpenAI's revenue growth has accelerated, primarily driven by the rapid expansion of its AI coding software business. Additionally, subscription sales continue to rise, its advertising business is beginning to contribute incremental revenue, and its core consumer business is maintaining steady growth. On the competitive front, OpenAI is fiercely vying with Anthropic for enterprise clients. Both companies have confidentially filed for IPOs, and Anthropic is expected to go public as early as this fall, potentially before OpenAI. OpenAI co-founder and President Greg Brockman stated that the company's annualized revenue grew by more than 20% month-over-month in July. Recently, the company has seen a significant increase in demand for AI agents, represented by flagship products like the coding tool Codex and the general-purpose assistant ChatGPT Work. Meanwhile, OpenAI has lowered prices on some models to respond more flexibly to the challenges posed by Anthropic and numerous other competitors.
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