US Stocks Hold Steady
US stocks were steady Thursday as investors absorbed fresh inflation and labor data. The S&P 500 (^GSPC) remained flat, while the Nasdaq Composite (^IXIC) showed little movement. Both indexes stayed level after a tech-fueled rally in the previous session. The Dow Jones Industrial Average (^DJI) rose slightly, increasing by 0.1%.
The stock market’s movements followed a volatile Wednesday. Enthusiasm for tech growth had pulled the market out of a sharp slide. The earlier drop was driven by diminishing hopes for a larger 0.5% interest rate cut by the Federal Reserve. The market now expects a smaller, 25-basis-point reduction.
Inflation and Rate Cut Expectations
A new reading on core consumer inflation surprised investors by coming in hotter than anticipated. Although the increase was slight, it reinforced the idea that the Federal Reserve is on track for a 25 basis point rate cut. Traders are now betting on an 85% chance of this smaller rate cut in the upcoming Fed meeting on Sept. 18. Just days earlier, the odds stood at around 50%.
Wholesale prices, measured by the Producer Price Index (PPI), also rose by 0.2% month-over-month in August. This increase was slightly above economists’ expectations. On an annualized basis, the PPI rose 1.7%, which matched expectations. July’s PPI was revised downward, further supporting predictions of stable inflation pressure.
Labor Data: A Mixed Signal
Labor data provided more uncertainty for investors. Initial jobless claims climbed higher than expected. The figure for last week reached 230,000, up 2,000 from the previous week. This increase in unemployment claims could add to the Federal Reserve’s deliberations on the upcoming interest rate decision. Higher jobless numbers may indicate some slack in the labor market, providing further evidence for a rate cut.
Corporate News: OpenAI Valuation Soars
In corporate developments, tech investors focused on the news that OpenAI is in talks to raise capital at a staggering $150 billion valuation. This figure would more than double its earlier valuation of $86 billion from earlier in 2024. Investors will be closely monitoring these discussions as OpenAI continues to draw significant attention in the rapidly growing AI sector.
US stocks were steady as investors weighed mixed inflation and labor data, keeping a close eye on the Federal Reserve’s upcoming rate decision. Inflation data and labor figures will continue to shape investor sentiment as the Federal Reserve meeting approaches.
Chart by Trading View
