05:03 PM EDT, 08/14/2025 (MT Newswires) -- US equity benchmarks closed little changed on Thursday as a hotter-than-expected producer price report prompted traders to unwind their expectations for a big interest rate cut next month.

The Dow Jones Industrial Average finished at 44,911.3 and the Nasdaq Composite settled at 21,710.7, just below the flat line. The S&P 500, meanwhile, eked out a fresh closing high of 6,468.5. Most sectors ended in the red, led by industrials, while financials saw the biggest gain.

In economic news, official data showed that US producer prices rose at the fastest pace in about three years in July, potentially fueling worries that tariffs could heat up inflationary pressures in the coming months.

The producer price index report follows Tuesday's data showing that consumer inflation in the world's largest economy slowed down last month on a sequential basis, with analysts saying earlier this week that businesses have yet to fully pass through tariff-related costs to consumers.

Following CPI data, markets moved to fully expect a 25-basis-point rate cut by the Federal Reserve next month, with some even betting on a bigger, 50-basis-point reduction. Those expectations for a larger cut have now been reversed, according to the CME FedWatch tool.

Traders have taken a "more subdued" view of next month's Fed policy decision, Macquarie said in a report.

"(Twenty-four) hours ago, by contrast, the talk on the street was of a 'mega' rate cut," the investment firm said. "Today's subdued tone is more grounded in reality."

The probability that the Fed will lower its benchmark lending rate by 25 basis points next month dropped to about 93% on Thursday from 94% Wednesday, while the odds of another pause rose to about 7% from zero, according to the CME FedWatch tool.

St. Louis Fed President Alberto Musalem told CNBC on Thursday that "it's too early to say exactly what policy I will be able to support" at the September meeting. A potential 50-basis-point rate reduction is "unsupported by the current state of the economy and the outlook," Musalem reportedly said.

San Francisco Fed President Mary Daly said in an interview with The Wall Streel Journal on Wednesday that the a 50-basis-point rate cut "would send off an urgency signal that I don't feel about the strength of the labor market." The Journal published an article on the interview on Thursday.

Weekly applications for unemployment insurance in the US declined more than expected, government data showed, suggesting that the labor market remained strong.

"There is nothing in the latest week's jobless claims data to alter (the Fed's) view of the labor market or our call that the Fed will hold off on cutting rates until December," Oxford Economics said.

US Treasury yields were higher, with the two-year rate rising 6.2 basis points to 3.75% and the 10-year rate gaining 4.7 basis point to 4.29%.

In company news, Tapestry (TPR) issued a full-year earnings outlook below the Street's estimates amid tariff-related impacts, even as the luxury fashion company's fiscal fourth-quarter results beat expectations. The company's shares slumped nearly 16%, the steepest decline on the S&P 500.

Deere (DE) was among the worst performers on the index, down 6.8%. The agricultural and construction equipment lowered the top end of its full-year profit outlook.

Intel ( INTC ) shares rose 7.4%, the top performer on the S&P 500, as Bloomberg News reported that the Trump administration is eyeing a stake in the chipmaker.

West Texas Intermediate crude oil was up 2.2% at $64.03 a barrel in Thursday late-afternoon trade. "Oil prices edged higher ahead of the US-Russia summit on Ukraine, though gains were capped by expectations of rising global supply," D.A. Davidson said in a client note.

Gold was down 0.6% at $3,387.30 per troy ounce, while silver fell 1.3% to $38.11 per ounce.