US Stock Market Key Points:
• S&P 500, Dow, and NASDAQ 100 manage to end in a relatively choppy session in positive territory
• Investors worried about inflation outlook
• All eyes on tomorrow’s US retail sales and next week’s FOMC monetary policy decision
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Most Read: S&P 500, Nasdaq 100 Post Modest Gains Tuesday
On Wednesday, the US equity indices ended with no clear direction and ended marginally higher. After yesterday’s disappointing CPI release, investors today assessed a new set of in-line inflation numbers, marking the biggest decline in two years.
At the close, the Dow and S&P 500 ended in positive territory, up 0.10% and 0.34%, respectively. Leading in some of the gains were the consumer discretionary sector, buoyed by news of Starbucks raising its guidance; and the energy sector, as oil prices staged a moderate rally following an IEA report that demand is likely to remain strong as some consumers switch from natural gas to oil. In addition, a higher-than-expected decline in gasoline inventories supported the commodity’s price. Meanwhile, the underperforming sector of the S&P 500 was real estate. Rising interest rates and lack of supply in an already expensive housing market are putting pressure on demand.
On the same note, the Nasdaq 100 managed to end in positive territory, rising 0.74% after pharmaceutical company Moderna, announced its willingness to supply a COVID vaccine to China.
S&P 500 (ES) Daily Chart
S&P 500 (ES) Mini Futures Daily Chart prepared using TradingView
On the economic front, the August PPI report was released today. While the headline index of wholesale prices saw an expected decline on a year-over-year basis, the core gauge came in slightly higher than anticipated, setting an overall cautious tone on Wall Street, but Tuesday’s episode looked nothing like it.
Yesterday’s CPI results triggered a major sell-off in equity indices as traders await information that could lead to a “policy pivot” by the FOMC, but the data surprised the upside, giving speculators a chance to trade wrong. Caught on the side and forced them. To get out of one’s position quickly, a position that probably lengthens the way.
Next week, when the FOMC announces its September interest rate decision and releases its new summary of economic projections, we’ll have a better idea of how policymakers will react to recent inflation developments. The market expects the cost of borrowing to rise further by 75 basis points, but some banks are now expecting a 100 basis point adjustment.
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—Written by Cecilia Sanchez-Corona, Research Team, DailyFX
