Dow tops 46,000, S&P 500 and Nasdaq notch records as CPI, jobs data clears way for Fed cut

US stocks closed at record highs on Thursday as the latest reading on inflation showed consumer prices ticked up in August and jobless claims rose to their highest level in nearly four years. Together, the data helped set expectations for the pace of interest rate cuts this year.

The Dow Jones Industrial Average led stocks higher, rising 1.4%, or over 600 points, and closing above 46,000 for the first time. The S&P 500 rose over 0.9%. The tech-heavy Nasdaq Composite gained around 0.7% for its fourth-consecutive record close and first time closing above the 22,000 mark.

Thursday's Consumer Price Index (CPI) report for August exhibited some signs that President Trump's tariffs are impacting consumer costs, after the August reading on wholesale inflation came in cooler than expected.

The CPI report showed inflation remained sticky last month, with the annual headline rate rising to 2.9%, compared with 2.7% in July. Month over month, prices rose 0.4% compared to July's 0.2% increase, an uptick compared to economists' expectations of a 0.3% monthly gain.

But in a shift from the past, markets are expected to shrug off the persistent price pressures.

The print isn't expected to dissuade the Federal Reserve from lowering rates at its meeting next week, as recent federal data has shown cracks in the labor market. An update on weekly jobless claims on Thursday continued to paint the picture of a weakening jobs landscape, with applications for unemployment benefits jumping to 263,000, the most in nearly four years.

Traders see a greater than 90% chance of a quarter-point reduction next week, and the vast majority expect the central bank to cut rates three times before the end of the year.

On the earnings front, Kroger and Adobe are on Thursday's docket.