Business

Nasdaq jumps as Fed-favored inflation data comes in cool: Stock market news today

September 29, 2023

Stocks mainly rose on Friday, as Wall Street digested a fresh read on the Federal Reserve’s preferred inflation gauge that could feed into interest rate expectations.

The S&P 500 (^GSPC) gained about 0.3% in midday trading, while the Dow Jones Industrial Average (^DJI) lost grip of earlier gains to trade around the flatline. The tech-heavy Nasdaq Composite (^IXIC) led the advance, up around 0.8%, with all three benchmarks looking to build on Thursday’s gains.

Firmly in focus is Friday’s release of the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation indicator. The August data showed that “core” PCE — which strips out food and energy — rose 3.9% on the year, the lowest since September 2021 and down from 4.2% in July. A cooling might dampen expectations the Fed will hike in November.

Stocks are set for sharp losses for the month and quarter as they start the final trading day of a brutal September. The major indexes are looking at drops of 3% to 5% for the month, battered by surging oil prices and fears the Fed’s higher-for-longer rates strategy means another hike this year.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

Bonds also saw some relief from those pressures on Friday, after comments from Fed officials helped soothe rate jitters. The yield on 10-year Treasuries (^TNX) fell after hitting levels not seen in over 15 years. But while the 30-year Treasury yield (^TYX) retreated, it’s still on track for its biggest jump since 2009 — stoking anxiety about the impact of the bond rout.

Also still weighing on minds is the looming US government shutdown, with its promise of significant harm to the economy and stock market. It’s looking all but inevitable that lawmakers will miss the midnight Saturday deadline to avert it — especially given the lack of a clear sticking point that’s seen it be called the “Seinfeld” shutdown.

In individual stocks, shares of Nike (NKE) put on over 6% after the retailer reported first quarter profit that topped estimates and stressed its confidence in Chinese demand.

Stocks little changed in afternoon trading

After starting the day in positive territory across all three major indexes, investors have wavered, losing ground and sending the Dow into the red.

The S&P 500 (^GSPC) rose by 0.2%, while the Dow Jones Industrial Average (^DJI) decreased by 0.1% or 32 points. The tech-heavy Nasdaq Composite (^IXIC) gained 0.7%
What rising bond yields mean for investors

This week the yield on 10-year Treasuries hit levels not seen in more than 15 years, climbing above 4.6%.

The yields carry massive importance in the US economy, closely watched as a benchmark for borrowing costs for households and corporations. They also help determine the value of other assets, influencing where investors put their money. Yahoo Finance’s explainer on bond yields can be found here.

As investors decide where to put their money, bonds with higher yields provide an alternative to stocks, especially during times of volatility. The safety and stability of bonds can punish the stock market as investors move their money from stocks into bonds. But for many investors with an appetite for lower risk, the boosted yields can be a boon.

Higher yields and the uncertainties of the stock market also partly reflect different perceptions of the Fed’s tightening campaign and the central bank’s ability to engineer a soft landing. What’s more, outstanding questions remain over whether the COVID era will usher in a period where higher rates are the norm in order to keep inflation and unemployment stable over time.
Fed’s preferred inflation measure shows cooling

Inflation as measured by the Federal Reserve’s preferred gauge grew at its slowest pace since September 202, new government data for August showed. The cooling has spurred bets that policymakers won’t hike US interest rates again this year.

The Personal Consumption Expenditures (PCE) Index was up 3.5% year-on-year in August, up from 3.4% the month prior and in line with expectations, Yahoo Finance’s Josh Schafer reports. “Core” PCE, which excludes the volatile food and energy categories, grew 3.9%, down from July’s 4.1% reading and in line with what economists surveyed by Bloomberg had expected.

On a monthly basis, core PCE rose 0.1% in August, down from 0.2% in July.

Core PCE is the inflation measurement most often mentioned by Fed Chair Jerome Powell, who noted last Wednesday that inflation remains “well above our longer-run goal of 2%.”

His comments came after the Fed last Wednesday maintained interest rates in a range of 5.25%-5.50%, the highest level since March 2001, while also forecasting holding interest rates higher for longer than anticipated in an effort to tame inflation. The Fed is closely following any economic developments that could stifle inflation’s path downward.
Stocks trending in morning trading

Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Friday:

AMD (AMD): After rising nearly 5% on Thursday, the chipmaker gained another 1% during morning trading. The rise comes after Microsoft chief technology officer Kevin Scott said AMD’s graphics cards will be increasingly critical to tech businesses. Chipmakers have enjoyed a stellar run so far this year as companies make a run to claim market share in AI, a technology that requires more computing power.

Blue Apron (APRN): The meal-kit maker catapulted higher, more than doubling its value on Friday, after announcing a $103 million sale to the food-delivery startup Wonder. The deal reflects a premium of more than 130% of Thursday’s closing price of $5.49. But for long-time investors, the stock has been an enormous drag.

Nike (NKE): Nike shares surged 9% after the company reported fiscal first quarter results after the bell on Thursday that topped Wall Street’s estimates.

Tesla (TSLA): The EV maker’s shares were up 1%. Wall Street analysts warned that Tesla may miss estimates for its third quarter deliveries due to factory shutdowns and softer demand.
Stocks open higher as inflation reading shows cooling

Wall Street began the trading day with fresh optimism after new government data for the month of August showed the Fed’s preferred inflation metric grew at its slowest pace since September 2021. But even as the day kicked off in the green, September has been a punishing month for the stock market as investors grappled with the Fed’s tightening campaign, which is set to last for several more years.

The S&P 500 (^GSPC) rose by 0.8%, while the Dow Jones Industrial Average (^DJI) increased by 0.7% or 200 points. The tech-heavy Nasdaq Composite (^IXIC) gained 0.8%
Nike, Tesla, and Alibaba: Stocks trending in premarket trading

Here are some of the stocks leading Yahoo Finance’s trending tickers page in premarket trading on Friday:

Nike (NKE): Nike shares were up 9%. Nike reported fiscal first quarter results after the bell on Thursday that topped Wall Street’s estimates.

Tesla (TSLA): The EV maker’s shares were up 1%. Wall Street analysts warned that Tesla may miss estimates for its third quarter deliveries due to factory shutdowns and softer demand.

Alibaba (BABA): Alibaba’s stock rose as much as 2% after Beijing proposed easing rules on cross-border data flows.

Carnival Corporation (CCL): Shares in Carnival rose by 2%. The cruise operator reports its earnings on Friday.
K

Stock futures pop ahead of key PCE inflation data

Wall Street stocks looked set to open in the green as investors waited for the release of inflation data closely watched by the Federal Reserve but were on track to end September and the quarter with losses.

Futures on the S&P 500 (^GSPC) rose 0.51%, while those on the Dow Jones Industrial Average (^DJI) added 0.49%, or 167 points. Contracts on the tech-heavy Nasdaq 100 were up 0.67%.