The Dow Jones Industrial Average experienced a significant rebound on Friday, rising 139 points, or 0.3%, following the release of the personal consumption expenditures (PCE) price index for August. The data showed that core inflation, excluding food and energy costs, ran at a 2.9% seasonally adjusted annual rate, in line with economists’ expectations. The all-items index also met expectations, with an annual rate of 2.7% and a monthly gain of 0.3%.
The PCE report provided some relief to investors, who had been cautious following Thursday’s jobs data and GDP revision. The market reaction was positive, with stock futures ticking higher after the data release. According to David Russell, global head of market strategy at TradeStation, “Following a three-day pullback in the broader market, this is good enough to pull buyers off the sidelines.”
The S&P 500 climbed 0.2%, while the Nasdaq Composite dropped 0.2%. The market’s performance was mixed, with some sectors showing strength and others weakness. The tech-heavy Nasdaq Composite has lost more than 1% week-to-date, while the Dow Jones Industrial Average has shed 0.3%.
The PCE report’s alignment with expectations calmed some worries about inflation and interest rates. Markets continue to price in two quarter-point rate cuts at the Fed’s upcoming meetings, in line with the central bank’s projections. However, Thursday’s jobs data and GDP revision had raised concerns that the economy might be strong enough to reduce the need for rate cuts.
The GDP revision showed a 3% growth rate in the second quarter, slightly higher than initially reported. This, combined with solid jobs data, had dampened bullish sentiment. Nevertheless, the PCE report’s in-line results alleviated some of these concerns, and the market responded positively.
Consumer sentiment in September was also largely in line with expectations. The University of Michigan’s consumer sentiment reading came in slightly lower than expected, but sentiment among those with larger stock holdings held steady.
The market’s recent decline had been driven in part by losses in software giant Oracle and other artificial intelligence players. Oracle’s stock has been under pressure amid questions over the strength of the AI trade, and the company’s shares are down more than 6% for the week.
Despite the rebound, the market still faces challenges. The S&P 500 is down 0.7% week-to-date, and the Nasdaq Composite has lost more than 1%. Investors will be watching closely for further developments on inflation, interest rates, and economic growth.
In conclusion, the PCE report’s in-line results provided some relief to investors, and the market responded positively. However, the market still faces challenges, and investors will be watching closely for further developments. As Russell noted, “No news is good news.” The market’s rebound may be a temporary reprieve, and investors will be looking for sustained momentum in the coming days.
Market Takeaways:
- Dow Jones Industrial Average rose 139 points, or 0.3%, following the PCE report
- S&P 500 climbed 0.2%, while Nasdaq Composite dropped 0.2%
- PCE report showed core inflation at 2.9% annual rate, in line with expectations
- Markets continue to price in two quarter-point rate cuts at Fed’s upcoming meetings
- Consumer sentiment in September was largely in line with expectations
What’s Next:
- Investors will be watching closely for further developments on inflation, interest rates, and economic growth
- The market’s rebound may be a temporary reprieve, and investors will be looking for sustained momentum in the coming days
- The Fed’s upcoming meetings will be crucial in determining the direction of interest rates and the market’s performance.
