S&P 500, Nasdaq climb as soft inflation dampens Fed rate hike expectations
SPY•The S&P 500 rose 0.36% and the Nasdaq gained 0.86% as August PCE inflation came in at 3.4%, below economists’ 3.7% estimate. Market expectations for a Fed rate hike of at least 25 basis points in October fell to about 39%, from roughly 51% the prior session.
1. Inflation cools rate expectations
The S&P 500 and Nasdaq climbed on Wednesday after August’s Personal Consumption Expenditures Price Index rose 3.4% year over year, below the 3.7% estimate. Market expectations for an October Fed rate hike of at least 25 basis points fell to about 39%, down from roughly 51% in the prior session and nearly 71% a week earlier. The final second-quarter GDP reading was revised up to a 2.2% annualized rate.
2. Indexes and sectors
The Dow fell 0.28% to 51,208.70, while the S&P 500 rose 0.36% to 7,698.79 and the Nasdaq gained 0.86% to 27,026.53. The S&P 500 and Nasdaq were on track for a second straight monthly and quarterly gain. Technology and communication services were the best-performing sectors.
3. Company movers
Hewlett Packard Enterprise rose 5.3% after raising its long-term revenue growth forecast for its networking business and announcing a $1.2 billion deal with Vultr. Moderna fell 5.7% after Citigroup downgraded the company to “sell” from “neutral.”
