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Headlines
- S&P 500 Advances: The S&P 500 and other major indices experienced gains, with the S&P 500 up 0.3%, Nasdaq 100 rising 0.5%, and Dow Jones increasing by 0.2%. Small-cap stocks also saw progress, with the Russell 2000 climbing 1%.
- Inflation and Economic Data: The producer price index for final demand increased by 0.2%, surpassing the 0.1% forecast. Applications for US unemployment benefits showed a slight rise, indicating a gradual economic slowdown.
- Market Reactions: Treasury yields saw a modest rise, while German bunds ended a seven-day streak of gains. Oil prices surged due to storm-related production disruptions, and gold reached an all-time high.
Following a $1.3 trillion rally, the S&P 500 experienced a mild advance. Treasuries fell across the curve. Swap traders projected a quarter-point Federal Reserve rate cut next week and 100 basis points in policy easing for the year. The dollar declined against most major counterparts.
The producer price index for final demand rose by 0.2% from the previous month, after July’s reading was revised downward. Bloomberg economists had anticipated a 0.1% increase. Separate data indicated a slight rise in US unemployment benefit applications, reflecting a gradual economic slowdown. “The economy isn’t deteriorating significantly, giving the Fed the opportunity to reduce rates,” stated Brian Henderson at BOK Financial. “Initial cuts may be 25 basis points each in September, November, and December, with a potential shift to one cut per quarter in the new year.”
The S&P 500 rose by 0.3%, with the Nasdaq 100 adding 0.5%, and the Dow Jones Industrial Average gaining 0.2%. A gauge of the “Magnificent Seven” top tech companies climbed 0.9%, while the Russell 2000 of small firms advanced by 1%. Kroger Co. surged on a positive outlook, while Micron Technology Inc. and Moderna Inc. faced declines due to an analyst downgrade and disappointing sales projections, respectively. Treasury 10-year yields increased by four basis points to 3.69%. German bunds ended a seven-day winning streak following comments from European Central Bank President Christine Lagarde, who indicated that rates would be sufficiently restrictive after a quarter-point interest rate cut to 3.5%.
Oil prices surged due to disruptions in crude production caused by storm Francine in the Gulf of Mexico. Gold reached an all-time high.
After Wednesday’s significant tech-driven rally, questions remain about the sustainability of momentum, according to Fawad Razaqzada at City Index and Forex.com. “Despite some continuation to the upside, any sign of weakening momentum could pose challenges for the bulls,” he noted. “At present, clear bullish catalysts are limited.”
