U.S. stock markets experienced a positive shift on Thursday, as investors interpreted new inflation and labor statistics that challenged previous expectations regarding a potential quarter-point interest rate cut anticipated next week.
The S&P 500 saw an increase of 0.5%, while the Nasdaq Composite enjoyed a 0.7% rise, building off strong closing gains driven by a burgeoning tech sector. The Dow Jones Industrial Average also climbed, albeit more modestly, rising by 0.2%.
This upward momentum follows a volatile trading session on Wednesday that ended with renewed optimism for technology stocks. Recent economic data reinforced expectations of a modest 25 basis point rate reduction by the Federal Reserve next week, rather than a more drastic cut of 0.5%.
On Thursday morning, reports indicated that the August Producer Price Index reflected a further easing in inflation pressures. Wholesale prices increased by 0.2% month-over-month—slightly more than economists had forecasted—while the annualized PPI rose by 1.7%, aligning with predictions and showing a downward revision of July’s figure. This data trend follows recent reports indicating that consumer price inflation is challenging its previous peaks, indicating a more gradual cooling in inflation dynamics.
The labor market data did present some wrinkles; initial jobless claims rose unexpectedly to 230,000 last week, which was 2,000 above what analysts had anticipated. This uptick in jobless claims shifted traders’ perceptions, pushing the likelihood of a 25 basis point rate cut to 87%, a significant jump from just 50% a few days earlier.
Conversely, in corporate news, shares of Moderna plummeted as much as 17% after the biotech company revised its annual revenue outlook for 2025 downward and announced plans to cut its research budget.
In additional market movements, oil prices surged on Thursday for the second consecutive day as production in the Gulf of Mexico faced interruptions due to Hurricane Francine. West Texas Intermediate crude climbed nearly 3% to approximately $69 per barrel, while Brent crude jumped to about $72 a barrel.
Meanwhile, gold prices reached record highs, driven by investor sentiment surrounding an expected rate cut from the Fed. Year-to-date, gold has surged over 24%, outperforming broader market indices. On Thursday, gold futures climbed by more than 1%, trading at around $2,576 per ounce, while silver futures also saw a strong performance, rising by 3% above $30.
Notably, General Motors and Hyundai announced a collaboration to co-develop vehicles and technologies, signifying a strategic partnership aimed at enhancing production capabilities, including advancements in electric and hydrogen technologies.
According to recent data from Redfin, mortgage payments have become less burdensome compared to last year, attributed to declining mortgage rates. The median mortgage payment fell to $2,558, reflecting a 1.3% decrease from last year, supported by a drop in the average 30-year fixed mortgage rate to 6.2%, the lowest level since February 2023. However, home prices remain high, with median sales prices still elevating by 3.7% year-over-year due to low supply.
Apple also made headlines by obtaining FDA approval for its AirPods to function as over-the-counter hearing aids, a significant move in the tech and health intersection.
Investors are now closely monitoring upcoming economic indicators and the potential impacts of the Fed’s impending policy decisions. The landscape remains dynamic, reflecting a mixture of positive developments and challenges across the economic front. With several corporations announcing strategic collaborations and product innovations, market participants have much to keep an eye on in the coming weeks. Despite the challenges, the overall sentiment appears cautiously optimistic as economic indicators suggest a path toward stability and growth amidst shifting currents.