Market Momentum Builds: NYSE Surges as PPI and Unemployment Data Fuel Optimism, Nasdaq Jumps 1%
New York Stock Market Closes Strong Amid Steady Economic Trends
The New York stock market closed strong, with expectations of a maintained interest rate cut path supporting stock prices. The Dow Jones Industrial Average closed at 41,096.77, up 235.06 points (0.58%) from the previous day on the New York Stock Exchange (NYSE).
New York Stock Exchange
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The S&P 500 index closed at 5,595.76, up 41.63 points, or 0.75%, and the Nasdaq Composite Index closed at 17,569.68, up 174.15 points, or 1.00%.
According to the U.S. Department of Labor, the producer price index (PPI) rose 0.2% in August from the previous month on a seasonally adjusted basis. This exceeded market expectations of a 0.1% increase and was a steeper increase than the previous month.
However, the August PPI rose 1.7% year-on-year (seasonally unadjusted), falling below the 2% mark for the first time since February of this year, easing inflation concerns.
The number of new unemployment insurance claims for the week was 230,000 on a seasonally adjusted basis. This is an increase of 2,000 from the previous week and exceeds the market expectation of 227,000.
The major stock indexes continued their upward trend on this day, smoothly digesting the economic indicators. Growth stocks represented by technology stocks and quality stocks with value characteristics showed strong performances across the board.
The Magnificent Seven, the seven largest tech companies, all rose. Alphabet rose more than 2%, and Metaplatforms also rose by 2%.
AI and semiconductor stocks were also strong across the board, with Broadcom up nearly 4%, Nvidia up 1.92%, and Adobe up 1.06%.
However, Adobe’s stock price plunged more than 10% in after-hours trading after its fourth-quarter earnings guidance was disappointing, despite its better-than-expected third-quarter results announced after the market closed that day.
The blue-chip stocks that make up the Dow Jones Industrial Average also showed strength across the board, but Intel lagged behind, falling more than 1%.
Moderna, the pharmaceutical company that developed and supplied the COVID-19 vaccine, saw its stock price plunge more than 12% after it announced plans to cut costs by $1.1 billion by 2027.
U.S. automaker General Motors rose more than 3% on news that it had signed a memorandum of understanding (MOU) with Hyundai Motor to collaborate on cars and supply chains.
Ahead of the Federal Open Market Committee (FOMC) meeting next week, all price indicators have been released. The market’s attention is focused on how much the FOMC will cut the base interest rate this month.
“Investors are generally taking a wait-and-see approach ahead of the FOMC,” said Mona Mahajan, chief investment strategist at Edward Jones. “It’s a seasonally weak September, so there will be volatility in markets, and economic growth is still cooling, but it’s not going to collapse.”
“This instability could continue,” he said. “But if we can achieve a soft landing against the backdrop of the Fed cutting rates and inflation gradually easing, I think the market will continue to do well.”
By industry, all sectors showed strength. Consumer discretionary rose over 1%, communication services jumped over 2%, and energy and technology also rose close to 1%.
According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability of a 50bp cut in the federal funds futures market has jumped to 35% in September, more than doubling from around 15% at the close the previous day.
The CBOE Volatility Index (VIX) closed at 17.07, down 0.62 points (3.50%) from the previous day.