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
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