S&P 500, Nasdaq advance as soft inflation tempers Fed rate-hike bets
SPY•The S&P 500 rose 0.59% and the Nasdaq gained 1.1% as August PCE inflation came in at 0.3% month-on-month, below the 0.4% estimate. Traders saw a roughly 38% chance of an October Fed rate hike, down from more than 50% a day earlier.
1. Indexes rise on inflation data
The Nasdaq gained more than 1% and the S&P 500 rose as softer-than-expected inflation buoyed hopes that the Federal Reserve might not raise rates as soon as next month. The Dow slipped 0.06%. August PCE inflation was 3.4% year-on-year, compared with economists’ 3.7% estimate; second-quarter data separately showed the US economy grew at a solid clip.
2. Rate-hike odds fall
Traders priced in a roughly 38% chance of an October rate hike, down from more than 50% the previous day. Barclays analysts noted that recent methodology changes in calculating PCE also contributed to the lower reading.
3. Quarterly gains in view
The S&P 500 and Nasdaq were on pace for a second straight quarterly advance if gains held, while the Dow was set for a quarterly decline. Most megacap and growth stocks rose, including Amazon and Apple, each up around 2%, and Alphabet, up 3%; chip stocks weakened, with AMD and Broadcom down nearly 1% each.
