Stock Market Maintains Strength Through Extended Weekend.
The latest US CPI boosts Wall Street's optimism for a September rate hike from the Fed Reserve. Market analysts are predicting a decrease of 0.5%. The indices finished the week positively.
Wall Street markets concluded the week with progressions. Following a cautious trading session, the indices spiked towards the end of the day. The Dow Jones Index climbed 0.6% to reach 41,563 points. The S&P-500 went up by 1% while the Nasdaq Composite increased by 1.1%. A total of 1787 (Thurs: 1909) stocks rose, 1017 (858) declined, and 65 (97) stayed constant. There will be no trading on Monday due to the "Labor Day" in the US.
The new US inflation statistics were the primary talking point. It mostly aligned with forecasts. The FED's preferred PCE price index for consumer spending, which gauges inflation, grew by 2.5% annually in July, as in June. The expected inflation rate is 2%. It increased by 0.2% (0.1%) monthly. In the core rate, excluding food and energy elements, the index climbed by 2.5% (2.6%) yearly and 0.2% (0.2%) monthly. Economists predicted rates of 2.7 and 0.2%. US consumers have moderately escalated their spending. A 0.3% increase was reported for incomes. Economists had anticipated a 0.2% rise.
The market's response to the data was generally reserved. Nigel Green from the wealth manager deVere stated, "The PCE data suggests a steady inflow of deflation." He examined the July development, admitting that the decision on a 25 or even 50 basis point decrease would solely be made with the US employment data next week. The sentiment for purchasing managers in the Chicago region improved more than expected in August. The University of Michigan's consumer sentiment index also improved for August.
Dollar gains after data - Oil prices slump
On the forex market, the dollar grew stronger after the statistics. The dollar index added 0.3%. Ipek Ozkardeskaya, an analyst from Swissquote Bank, said that the "dovish" members of the Fed, who support interest rate drops, concentrate more on the employment data rather than inflation statistics. A significant shift could be brought about by powerful employment data upcoming week, she added.
Oil prices dropped substantially. The prices of the WTI and Brent types fell by up to 3.1%. As per reports, OPEC and its allies intend to commence phasing out production cuts in October. The reason behind this is the reduction in Libyan production and the expected initiation of an interest rate drop by the US Federal Reserve in September.
On the bond market, yields continued their ascent after the inflation data. The yield on ten-year bonds rose by 5.6 basis points to 3.92%. The gold price relinquished some of its previous day's gains. Market participants attributed this to profit-taking. The price of an ounce of gold fell by 0.7%.
Dell increases due to results - Intel sees large surge
Dell Technologies reported higher revenues and profits in the second quarter as demand for servers utilized for Artificial Intelligence surged. Shares increased by 4.4%. Intel (+9.6%) may undergo strategic modifications and cost-cutting measures. The US chipmaker is examining different business alternatives before its September board meeting, according to Bloomberg News, citing anonymous sources. Under consideration are the possibilities of scrapping plans for new factories and splitting the product design and manufacturing business.
Cisco Systems (-0.3%) lost a patent infringement lawsuit and was ordered to compensate Paltalk Holdings $65.7 million.
Goldman Sachs plans to lay off over 1,300 workers as part of its annual review process to eliminate underperforming employees, according to sources familiar with the matter. The bank is expected to reduce its workforce by 3 to 4%. Shares ended almost unchanged.
Lululemon Athletica (-0.2%) is grappling with a continued slowdown in its business. The athletic apparel maker reduced its full-year forecast. However, the company surpassed earnings expectations in the second quarter. Shares of Marvell Technology soared by 9.2%. The manufacturer of storage, telecommunications, and semiconductor products offered a compelling outlook for the current quarter.
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In light of the stability in the US inflation rate, discussions about an Economic and Monetary Union between the EU and the US have been revitalized. Some market analysts argue that a more integrated economic system could help stabilize global inflation trends.
Given the current economic climate and the strong performance of US indices, some investors are speculating about the potential benefits of an Economic and Monetary Union between the EU and the US, citing potential for more predictable monetary and fiscal policies.
