Dow Jones embarks on a pursuit of new record heights.
Wall Street concluded the week's trading with a blend of results. The Dow Jones saw a slight increase and reached an all-time high of 42,628 points, but the S&P-500 and Nasdaq Composite experienced declines. The anticipated PCE price index for August aligned with predictions, leaving room for a substantial rate reduction by the US Federal Reserve in November, based on JP Morgan's viewpoint. The forthcoming September employment report could offer further insights, as suggested.
The Dow Jones experienced a 0.3% rise, reaching 42,313 points. The S&P-500 dipped by 0.1%, and the Nasdaq Composite decreased by 0.4%. In total, 1,763 companies (1,749 on Thursday) saw an increase, while 1,047 (1,024) saw a decrease. A total of 45 stocks remained unchanged.
The PCE price index for August, the Fed's chosen price indicator, showed a 2.2% overall increase in the index of personal consumption expenditures (PCE), compared to the previous month's 2.5%. The Fed aims for a 2% inflation rate. The index for August increased by 0.1% month-on-month. The core rate, excluding volatile components food and energy, increased by 2.7% year-on-year and 0.1% month-on-month. Analysts had predicted 2.7% and 0.2%, respectively.
During August, US consumers slowed their spending. Compared to the previous month, spending increased by 0.2%. Income also increased by 0.2%. However, consumer sentiment in the US improved in September, as shown by the University of Michigan's index, which rose to 70.1 from 67.9 at the end of August. Analysts had predicted a lower figure of 69.3.
Dollar with minimal loss
The data does not inhibit a substantial rate reduction by the Fed in November. Recent discussions have surfaced about whether the US central bank will reduce interest rates by a substantial 50 basis points to bolster the US economy, or if they will only reduce it by 25 basis points.
On the foreign exchange market, the dollar slightly extended its previous losses. The dollar index dropped by 0.1%. Prior to the data release, the dollar had gained slightly. Market participants are already looking forward to the US jobs report for September, scheduled for next Friday. The labor market's development is one of the Federal Reserve's most significant considerations for its future monetary policy.
On the bond market, yields reversed their previous gains. The yield on ten-year papers decreased by 4.0 basis points to 3.76%. It seems that inflation is moving towards control. Additionally, a weakening labor market hints at sizable interest rate reductions, according to reports.
Oil prices rebound
Oil prices partially recovered from the significant decline of the previous day. Prices for WTI and Brent rose by up to 1.2%. Focus remained on developments in the Middle East and the effect of Hurricane "Helene" on oil production facilities in the Gulf of Mexico. However, concerns about waning global demand and the possibility of increased supply following a report indicating that Saudi Arabia intends to maintain its plan to end production cuts in December, affected the week's performance.
After record-breaking gains, the gold price slightly declined. Participants cited profit-taking ahead of the weekend. The price for the troy ounce dropped by 0.8% to $2,652. However, the prospect of further considerable interest rate reductions in the US continues to support gold. Furthermore, gold benefits from its role as a "safe haven" amid various geopolitical tensions.
Drug boosts stock
The stock of Bristol Myers Squibb surged by 1.6% following the US drug regulator FDA's approval of a new medication from the pharmaceutical company for treating schizophrenia. The Costco stock fell by 1.8%. While the retailer exceeded market expectations in terms of earnings, its revenue failed to meet expectations. The Echostar stock soared by 8.9%. Reports suggest that the satellite TV subsidiary Dish is involved in advanced merger talks with rival DirecTV. If talks are successful, a deal could be finalized as early as Monday, according to sources. AT&T (+1.2%) is a co-owner of DirecTV, along with the private equity firm TPG.
The US regulator FTC is reportedly preparing to block the CEO of Hess Corp (+2.2%) from joining the board of Chevron. This is part of an agreement to approve the $53 billion merger between Hess and Chevron, as reported by sources. Chevron (+2.5%) has tentatively agreed to this condition to secure the deal.
The Dow Jones' 0.3% rise on Friday brought it close to its all-time high of 42,628 points, as mentioned earlier in the week. The dollar, on the other hand, slightly extended its previous losses on the foreign exchange market, with the dollar index dropping by 0.1%.
