Wall St indexes rise as PPI data keeps smaller rate cut in view
Updates with preliminary closing prices
By Sinéad Carew and Shashwat Chauhan
Sept 12 (Reuters) -Wall Street's main indexes rose on Thursday after higher-than-expected producer prices data reinforced expectations for a 25-basis point rate cut by the Federal Reserve, while Moderna slumped following a downbeat revenue forecast.
The producer price index (PPI) for final demand rose 0.2% in August, compared with estimates for0.1% growth. The core number, which strips out volatile food and energy prices, rose 0.3%, higher than the 0.2% forecast.
Separately, initial claims for state unemployment benefits stood at 230,000 for the week ended Sept. 7, in line with estimates.
"This week's data pretty much confirms that we're not likely to have a hard landing and that we're in a soft landing. Inflation came down in the consumer and the producer numbers," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
"As long as investors see that interest rate cut and a path forward for interest rate cuts they're excited about prospects in the stock market and especially the growthier sections,"
A string of weakening employment and economic growth data over the past few weeks had fueled some bets on a larger-than-usual 50-bps interest rate cut by the Fed, but these bets had faded afterWednesday's inflation report.
While on Thursday the bets fluctuated, traders were still betting on a69% chance the U.S. central bank cuts rates by just 25 bps when it meets on Sept. 17-18, CME's FedWatch Tool showed. It would be the first rate cut since March 2020.
According to preliminary data, the S&P 500 .SPX gained 42.70 points, or 0.77%, to end at 5,596.83 points, while the Nasdaq Composite .IXIC gained 175.63 points, or 1.01%, to 17,571.16. The Dow Jones Industrial Average .DJI rose 243.64 points, or 0.60%, to 41,105.35.
The more economically sensitive small-cap Russell 2000 .RUT was outperforming during the session.
"There's probably some bargain hunting. Small caps is an area that's lagged all year and they'll tend to be rate sensitive so if rates are coming down that might have a decent impact," said Chuck Carlson, CEO of Horizon Investment Services in Hammond, Indiana.
Meanwhile, Moderna's MRNA.O stock fellafter the vaccine maker forecast sales of $2.5 billion to $3.5 billion next year, below analysts' estimates.
Kroger KR.N shares rallied after the supermarket chain beat second-quarter estimates and raised the lower end of its annual sales forecast.
Shares in Warner Bros Discovery WBD.O andCharter Communications CHTR.O gained after they announced that Charter wouldprovide an ad-supported version of Warner's streaming services Max and Discovery+.
Shares of gold miners jumped as spot gold XAU= hit a record high, with the Arca Gold BUGS index .HUI rising.
Reporting by Sinéad Carew in New York, Shashwat Chauhan and Lisa Mattackal in Bengaluru; Editing by Maju Samuel, Shounak Dasgupta and Richard Chang and David Gregorio
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
