A trader works on the floor of the New York Stock Exchange.
Stock futures were stable in early trading Thursday, following a significant market rally. Investors reacted positively to signs of softening jobs and stable inflation, hinting that the Federal Reserve might lower interest rates soon.
The Dow Jones Industrial Average remained flat, as did the S&P 500 and Nasdaq 100 futures.
On Thursday, the Dow surged over 600 points, marking a noteworthy milestone as it closed above 46,000 for the first time. The S&P 500 rose by 0.9%, and the tech-heavy Nasdaq Composite climbed 0.7%. All three major indices hit record highs.
The Consumer Price Index (CPI) reported a monthly increase of 0.4% for August, slightly higher than the expected 0.3%. However, its annual rise of 2.9% met forecasts.
Despite this, weekly unemployment claims stole the spotlight. Jobless claims unexpectedly jumped to their highest level since October 2021, with 263,000 filings for the week ending September 6. This was above the anticipated 235,000.
Seema Shah, chief global strategist at Principal Asset Management, commented, “The CPI report didn’t sway the Fed’s decision-making. The rise in jobless claims adds urgency to their considerations, likely prompting Chair Jerome Powell to indicate a series of rate cuts ahead.”
Futures markets suggest a near certainty of a 0.25 percentage point rate cut during the Fed’s meeting on September 17, as per the CME FedWatch tool.
Currently, all three indices have gained about 1.6% this week. The S&P 500 is on track for its best performance since August, with five positive weeks in six. The Nasdaq aims for its second consecutive winning week, while the Dow looks to close positively for the first time in three weeks.
Recent data hints at broader economic trends. A survey by the National Federation of Independent Business revealed that 56% of small business owners are pessimistic about current economic conditions. This sentiment could influence market reactions in the coming weeks, with many closely watching how the Federal Reserve adjusts policies in response.
Understanding these dynamics helps clarify the balance between inflation, job market changes, and Federal Reserve actions, factors that continue to reshape our economic landscape.
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