This Thursday, US stocks saw positive trading early in the day as investors evaluated fresh economic data, while inflation woes and tech activity continued to play a pivotal role in market direction. The S&P 500 (^GSPC) rose 0.15%, the Nasdaq Composite (^IXIC) added 0.3%, while the Dow Jones Industrial Average (^DJI) remained flat.
Today’s rise followed a rocky session on Wednesday, with tech stocks helping lift the market out of an earlier slide triggered by inflationary concerns. On Thursday, more data pointed to moderating inflation.
Inflation Trends and Labor Market Signals
The Producer Price Index (PPI) for August showed that inflationary pressures are leveling. Wholesale prices increased by 0.2% month-over-month, matching analysts' expectations. On an annual basis, the PPI rose by 1.7%, while July's numbers were revised slightly lower. This data reinforced expectations that inflation might cool off enough for the Fed to maintain a steady course on interest rates in the coming months.
Meanwhile, the labor market showed signs of softening, with initial jobless claims rising to 230,000, higher than anticipated. The 2,000 claim increase from the previous week suggests a potential slowing in the labor market, adding weight to the narrative that the Federal Reserve may pause future rate hikes.
Tech Sector Performance and Corporate News
Tech stocks continued to rally, bolstered by ongoing optimism surrounding innovation and corporate moves. Apple (AAPL) shares dipped 0.36% after the FDA approved its hearing aid software for use in AirPods. The company announced the feature at its annual event, positioning it as a solution for individuals with mild to moderate hearing loss. Despite this positive development, Apple stock remained relatively unchanged as investors continued digesting the implications of its broader AI efforts, introduced earlier in the week.
In the airline industry, Delta Air Lines (DAL) offered a stronger-than-expected outlook, projecting full-year adjusted earnings per share at or above $6.50. Despite this, Delta's stock fell nearly 2%, showing concerns about the lingering effects of a summer tech glitch that briefly disrupted its operations.
Investor Sentiment and Rate Expectations
With inflation cooling and the labor market showing signs of a slowdown, investor sentiment is leaning towards a more dovish approach by the Federal Reserve. The odds of a quarter-point rate cut have now climbed to 87%, compared to 50% just a week ago. Traders are watching closely to see if further economic data aligns with these expectations, setting the stage for the Fed's next move.
As the trading session continues, markets remain cautiously optimistic, with tech stocks and key inflation indicators guiding the way forward. Investors will be keeping an eye on Friday's consumer sentiment data for further clues about the health of the US economy.
