Sept 12 (Askume) – Wall Street’s main stock indexes closed with gains on Thursday as the latest inflation data bolstered expectations for a 25 basis point interest rate cut from the Federal Reserve, while Moderna’s weak revenue forecast dragged the S&P 500 lower.
The final demand producer price index (PPI) rose 0.2% in August, while a 0.1% increase was expected. Excluding volatile food and energy prices, the core data rose 0.3%, higher than the 0.2% expectation.
In addition, initial claims for state unemployment benefits for the week ending September 7 were in line with expectations at 230,000.
“This week’s data largely confirms that we’re not in a hard landing, but a soft landing,” said Peter Tudge, president of Chase Investment Advisors in Charlottesville, Virginia.
“As long as investors continue to see a path forward for interest rates to be lower and for rate cuts to be made, they will remain bullish on the prospects for equities and particularly the growth sectors.”
Some were expecting the Fed to cut interest rates by 50 basis points more than usual due to weak employment and economic growth data over the past few weeks, but that sentiment subsided after Wednesday’s inflation report .
CME Group’s FedWatch tool showed that betting was more volatile on Thursday, but traders were still betting on a 69% chance of the Federal Reserve cutting rates by 25 basis points at its September 17-18 meeting. That would be the first rate cut since March 2020.
The Dow Jones Industrial Average (.DJI) rose 235.06 points, or 0.58%, to 41,096.77; the S&P 500 Index (.SPX) rose 41.63 points, or 0.75%, to 5,595.76; the IX rose 174.15 points, or 1.00%, to 5,595.76. The BSE rose 9.68 points, or 17,566.
The more economically sensitive small-cap Russell 2000 (.RUT) outperformed the market, rising 1.2%.
“There could be some trade-offs,” said Chuck Carlson, CEO of Horizon Investment Services in Hammond, Ind. “Small-cap stocks are an area that tends to lag throughout the year, and they tend to be rate-sensitive, so if rates go down, that could make sense.”
All 11 industry sectors in the S&P 500 rose, led by communication services (SPLRCL) which rose 2%.
The industry’s biggest gainer was Charter Communications’ Warner Bros Discovery (WBD.O)(CHTR.O) shares rose 10.4% after it announced the cable company would offer ad-supported versions of Warner’s streaming services Max and Discovery+ to its customers. Charter shares rose 3.6%.
Moderna (MRNA.O) closed down 12.4%, its lowest since November. The vaccine maker forecast sales of $2.5 billion to $3.5 billion next year, below analysts’ expectations.
In more encouraging news, shares of Kroger (KRN) rose 7.2% after the supermarket chain beat second quarter forecasts and raised the low end of its annual sales forecast.
Gold mining shares surged as spot gold hit a record high, with the Arca Gold BUG Index (.HUI) rising 5.8%.
Advancing issues outnumbered declining ones on the New York Stock Exchange by a ratio of 3.45 to 1, with 405 stocks hitting new highs and 46 hitting new lows.
A total of 2,665 stocks advanced and 1,543 declined on the Nasdaq market. Advancing issues outnumbered declining ones by a ratio of 1.73 to 1. 37 S&P 500 stocks reached new 52-week highs and no new lows; the Nasdaq Composite hit 73 new highs and 76 new lows.
Over the last 20 trading days, an average of 10.82 billion shares have traded on U.S. exchanges, compared to 10.58 billion shares exchanged over the same period.
