The sluggish stock market is expected to perk up today amid higher volatility. Wall Street is going to regain some optimism. Investors are checking not only the economic calendar but also anticipating the long-awaited IPO.
Following mixed inflation data, the benchmark stock indices closed also mixed yesterday. The Dow Jones showed the worst performance and closed 0.20% down. The Nasdaq managed to gain 0.29% intraday. The S&P 500 inched up by 0.12% to close at 4,467.
The major stock indices traded quietly without a common dynamic in the New York pre-market. Futures on the stock indices received a fresh impetus before the opening bell. The S&P 500 is expected to trade in the intraday corridor between 4,450 and 4,510.
The S&P 500 and the Nasdaq closed in the green on Wednesday because the inflation data showed moderate growth of consumer prices in August and cemented expectations that the Federal Reserve will maintain the funds rate at the current level in September.
The Labor Department reported that consumer prices accelerated in August at the fastest pace in 14 months, mainly due to a jump in gasoline prices. At the same time, the annual rate of the core CPI was the lowest in the last two years.
Following the report, the market has upgraded the chance of the Fed’s status quo in September to 97%. Besides, the consensus suggests the chance of the Fed’s pause in November is 61%.
In this context, mega-cap stocks such as Tesla, Meta, Microsoft, and Amazon each rose by more than 1%.
However, Apple's rough patch continued on Wednesday. The company's stock fell by 1.2% for the second day in a row following the presentation of new iPhones on Tuesday.
Elsewhere in the corporate sector, Ford Motor's shares climbed by 1.5% amid the automaker's plans to double the production of hybrid F-150 pickups in 2024.
Citigroup shares went up by 1.7% after CEO Jane Fraser announced a major management reshuffle, which will end up in significant job cuts and give her direct control over the bank.
Moderna shares added 3.2% after the pharmaceutical manufacturer stated that its new flu vaccine achieved its primary goal in a late-stage study.
By Thursday, futures on the benchmark indices were gearing up for an upward opening. The focus shifted to data on producer prices, retail sales, and unemployment claims.
The tech sector and AI fans were eagerly awaiting the long-anticipated debut of Arm Holdings in the stock market.
The economic reports showed stronger-than-expected figures, arousing concerns about stubborn inflation. In turn, this reinforced the belief that the Federal Reserve is likely to keep interest rates elevated for a longer period.Producer prices grew by 0.7% in August, the highest score since June 2022. The figure surpassed the consensus of a 0.4% increase. The PPI for consumer goods climbed by 2%, driven by a surge in electricity prices of 10.5%.
Excluding volatile components such as food and energy prices, the core PPI slowed down to 0.2% following a growth of 0.4% in the previous month. The annual factory inflation reached 1.6%, the fastest pace in 4 months. Retail sales expanded more than expected in August thanks to rising gasoline prices. Retail sales rose by 0.6%, a 0.1% uptick from a 0.5% increase in July. The actual reading is much stronger than the expected 0.2%. The report proves robust consumer spending despite high inflation and borrowing costs. Excluding cars, gasoline, building materials, and food services, retail sales edged up by 0.1%.
Investors are worried by a weekly update on unemployment claims. The first-time claims for unemployment benefits rose to 220,000 last week from 217,000 a week ago. The actual increase was lower than the expected 225,000 claims.
All in all, the batch of fresh data indicates persistent inflationary pressure and the robust labor market. Nevertheless, traders are certain about the Fed’s pause in rate hikes which will be announced next week. The market also believes that the central bank will signal the end of monetary tightening, though interest rates could remain at elevated levels for a long time.
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