Stock market today: Wall Street rallies to records after inflation finally slows

NEW YORK — U.S. stocks rallied to records on hopes that inflation is heading back in the right direction. The S&P 500 jumped 1.2% Wednesday to top its prior all-time high set in March. The Nasdaq composite added 1.4% to its own record set a day earlier, while the Dow Jones Industrial Average rose 0.9% to beat its own recent high. Treasury yields also eased after a report showing a slowdown in inflation boosted expectations for the Federal Reserve to cut interest rates this year.

Stocks that tend to benefit the most from lower interest rates helped lead the market. Real-estate stocks in the S&P 500 climbed 1.6%, while utility stocks rose 1.3%. Their dividend payments look better to investors when bonds are paying less in interest. Perhaps more importantly, the slowdown was a relief after reports for the consumer price index, or CPI, earlier this year had consistently come in worse than expected. That string of disappointing data had washed out forecasts for the Federal Reserve to soon lower its main interest rate, which is sitting at its highest level in more than two decades.

A separate report showed a stall in spending growth at U.S. retailers in April from March. It was a weaker showing than the 0.4% growth economists expected. That could threaten one of the main hopes that's rallied the U.S. stock market toward its record levels: The Federal Reserve can pull off the balancing act of slowing the economy enough through high interest rates to snuff out high inflation but not so much that it causes a bad recession.

On the losing end were GameStop and AMC Entertainment, as momentum reversed following their jaw-dropping starts to the week. GameStop fell 22.1%, but it has still more than doubled for the week.

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