Stock Market Outlook Amidst Cooling Inflation and Labor Data
On Thursday, U.S. stock futures edged higher, reflecting cautious optimism ahead of upcoming inflation and labor reports. Dow Jones Industrial Average futures gained 64 points, or 0.2%, while S&P 500 and Nasdaq 100 futures increased by nearly 0.2% and 0.1%, respectively.
Nvidia, a key player in Wednesday’s market turnaround, saw its shares climb 0.9% in premarket trading. CEO Jensen Huang emphasized strong demand for the company’s products, further fueling investor confidence in the tech sector.
The previous session was marked by volatility as major indexes fluctuated after the release of the August Consumer Price Index (CPI), which showed mixed inflation signals. Tech stocks led a late-day rally, helping the S&P 500 finish 1.07% higher, despite earlier losses of more than 1%. This marked the first time since October 2022 that the index rebounded from such an intraday drop.
Similarly, the Dow Jones Industrial Average managed to recover, closing up 124.75 points, or 0.31%, after falling as much as 743.89 points earlier in the session. The Nasdaq Composite, boosted by strong tech performance, surged 2.17% after initially dropping by more than 1%.
Investors are now closely monitoring upcoming inflation and labor market data, which could shape future decisions by the Federal Reserve regarding interest rates. The resilience of tech stocks, particularly Nvidia, continues to offer support amid broader market uncertainty.
Wall Street Rallies as Inflation Cools and Rate Cut Expected
Wall Street reversed its early losses on Wednesday, closing higher after a key inflation report and U.S. presidential debate analysis. The Consumer Price Index (CPI) showed annual inflation cooling to 2.5%, lower than expected, while core inflation saw a slight monthly gain of 0.3%. This data cemented expectations that the Federal Reserve will implement a 25-basis point rate cut next week.
Tech stocks, especially in semiconductors, drove the rally, pushing the Nasdaq Composite to a 2.17% gain. The Dow Jones rose 0.31%, and the S&P 500 advanced 1.07%.
Investors also analyzed Tuesday’s debate between Vice President Kamala Harris and former President Donald Trump. The debate touched on various key issues such as the economy, immigration, abortion, and Trump’s legal challenges. Market participants closely listened for any potential policy shifts that could impact economic decisions post-election.
According to Chuck Carlson, CEO of Horizon Investment Services, the inflation report gave both inflation optimists and pessimists something to consider. The probability of a 25-basis point cut is now seen as 85%, with only a slim chance of a 50-basis point cut. Carlson remarked that market sentiment may now be shifting, with fewer concerns over a larger rate cut potentially signaling more stability.
Brent crude prices, meanwhile, rebounded from 3-1/2 year lows as inflation cooled. All three major U.S. stock indexes pulled off a remarkable U-turn, transforming a mid-day sell-off into a late-afternoon rally.
With these developments, the focus remains on the Federal Reserve’s upcoming policy meeting and further debates leading up to the U.S. presidential election.
