NEW YORK (AP) — Stocks are opening higher on Wall Street after the government reported inflation eased slightly last month. The S&P 500 is up 1.6% just after the opening bell Wednesday. The Nasdaq and Dow Jones industrials are also up strongly. The Labor Department reported that U.S. inflation in July eased to 8.5% from the previous month’s four-decade high of 9.1% as gas prices retreated significantly, which could get the Federal Reserve to be less aggressive about raising interest rates. Shares in Europe rose and oil prices recovered from earlier losses.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
Wall Street headed for strong gains before the opening bell Wednesday after the government reported inflation eased slightly last month, but remained high enough to be an issue of concern at the Federal Reserve.
Futures for the benchmark S&P 500 index rose 1.8% and 1.3% on the Dow Jones Industrial Average.
The Labor Department reported that U.S. inflation in July eased to 8.5% from the previous month’s four-decade high of 9.1% as gas prices retreated significantly.
But anything above 8% is “still too high” for the Fed, Tan Boon Heng of Mizuho Bank said.
“The fight to tackle inflation is far from over,” Tan said before the inflation data was released.
While some signs point to inflation easing in the coming months, it will likely remain far above the Federal Reserve’s 2% annual target well into next year and maybe even into 2024. Chair Jerome Powell has said the Fed needs to see a series of declining monthly core inflation readings before it would consider pausing its rate hikes.
The Fed has raised its benchmark short-term rate at its past four rate-setting meetings, including a three-quarter point hike in both June and July — the first increases that large since 1994. Investors expect another hike of 0.75 percentage points in September after data last week showed hiring was stronger than forecast.
Investors fear that efforts by the Fed and other central banks in Europe and Asia to cool inflation might derail global economic growth.
Fed officials acknowledge there is a danger the U.S. economy might tip into recession, but some point to the strong job market as evidence it can tolerate more rate hikes.
In midday trading, the FTSE 100 in London gained 0.3% and the DAX in Frankfurt advanced 1.1%. The CAC 40 in Paris climbed 0.8%.
In Asia, the Shanghai Composite Index lost 0.5% to 3,230.02 and the Nikkei 225 in Tokyo sank 0.7% to 27,819.33. The Hang Seng in Hong Kong plunged 2% to 19,610.84.
The Kospi in Seoul fell 0.9% to 2,480.88 and Sydney’s S&P-ASX 200 was 0.5% lower at 6,992.70.
India’s Sensex lost less than 0.1% to 58,826.80. New Zealand and Southeast Asian markets retreated.
Markets also have been rattled by Russia’s war on Ukraine, which caused a spike in prices of oil, wheat and other commodities, and uncertainty about Chinese anti-virus measures that disrupted manufacturing and trade.
In energy markets, benchmark U.S. crude was unchanged from the previous day in electronic trading on the New York Mercantile Exchange. The contract fell 26 cents to $90.50 on Tuesday. Brent crude, the price basis for international trading, shed 7 cents to $96.24 per barrel in London. It declined 34 cents the previous session to $96.31.
The dollar declined to 133.25 yen from Tuesday’s 135.18 yen. The euro rose to $1.0319 from $1.0205.
On Tuesday, the S&P fell 0.4%, the Dow slipped 0.2% and the Nasdaq lost 1.2%.