Four out of every five stocks in the S&P 500 index climbed, though pullbacks for Nvidia, Microsoft and a handful of other highly influential companies masked that underlying strength. Those giants have been the market’s biggest winners amid a frenzy centred on artificial intelligence technology, causing critics to say they had become too pricey, and they helped drag the S&P 500 down 0.9 per cent from its all-time high set a day before.

The drops for big tech stocks also pulled the Nasdaq composite down 2 per cent from its own record. The drops broke seven-day winning streaks for both the S&P 500 and Nasdaq composite. The Dow Jones Industrial Average, which has less of an emphasis on tech, rose 32 points, or 0.1 per cent.

The direction was decidedly up for the majority of stocks on Wall Street, particularly housing-related companies, real-estate owners and others that benefit from easier interest rates. SBA Communications, which owns towers and other sites used for wireless communications infrastructure, jumped 7.5 per cent to record the biggest gain in the S&P 500.

Smaller companies, which have lagged the market’s behemoths for a while, were also strong, and the Russell 2000 index of smaller stocks leaped 3.6 per cent to lead the market decisively. The shift is encouraging to some market watchers, who see it as healthier when more stocks are participating in a rising market instead of just an elite overpowered 1 per cent.

The day’s action was even stronger in the bond market, where yields tumbled as traders built bets for the US Federal Reserve to soon begin lowering its main interest rate. It’s been sitting for nearly a year at its highest level in more than two decades.

Wall Street wants lower interest rates to release pressure that’s built up on the American economy because of how expensive it’s become to borrow money to buy houses, cars or anything on credit cards. Fed officials, though, have been saying they want to see “more good data” on inflation before making a move.

Wall Street considered that Thursday’s report – which showed milder price increases than expected from a year earlier for petrol, cars and other things consumers bought during June – provided just that.

“One word: pivotal,” said Goldman Sachs Asset Management’s head of multi-sector investing, Lindsay Rosner. “With three inflation prints between this morning and September’s Fed meeting, today’s print was crucial in helping the Fed gain confidence [that] inflation is still moving in the right direction.”

Following the report’s release, Treasury yields tumbled. The yield on the 10-year Treasury fell to 4.20 per cent from 4.28 per cent late on Wednesday and from 4.70 per cent in April. That’s a major move for the bond market and provides a big lift for stock prices.

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Lower yields helped real-estate owners and utilities lead the way in the sharemarket. Falling bond yields make those stocks’ relatively high dividends more attractive to investors seeking income.

Apart from hopes for coming cuts to interest rates, expectations for strong profit growth also pushed the US sharemarket to its records. Analysts expect S&P 500 companies to deliver their best overall growth in more than two years this coming reporting season, said FactSet, but it’s getting off to a mixed start.

All told, the S&P 500 fell 49.37 points to 5584.54. The Dow rose 32.39 to 39,753.75, and the Nasdaq composite dropped 364.04 to 18,283.41.