In recent market activity, US benchmark equity indexes demonstrated a lack of directional clarity as traders analyzed the official consumer inflation data for August. The Dow Jones Industrial Average fell by 0.5%, hitting a midday mark of 40,547.8. Conversely, the Nasdaq Composite experienced a modest uptick, rising by 0.7% to reach 17,144.
The S&P 500 index, however, showed minimal movement, settling at 5,492.7. Excluding technology stocks, all market sectors found themselves in the red, with consumer staples and financial sectors leading the declines. From an economic standpoint, the latest government data revealed that US consumer inflation saw an expected rise month-over-month.
Notably, the annual inflation rate recorded the smallest increase since February 2021. Analysts at TD Economics provided insight, noting, "The August readings of employment and inflation have done little to strengthen the case for a larger, 50-basis-point rate cut next week. Instead, the (Federal Reserve) is likely to play it cool and cut rates by just 25 (basis points), but also signal more easing in the months ahead." Market speculation suggested that the odds of a 25-basis-point interest-rate cut on September 18 surged to 87%, up from 66% just a day prior.
In contrast, the likelihood of a more aggressive 50-basis-point reduction dipped to 13% from 34%, as indicated by the CME FedWatch tool. The economic landscape is set to shift further with the scheduled release of the official producer prices report for August, enhancing the anticipation surrounding future monetary policy decisions. On the housing front, US mortgage applications saw an increase for the third consecutive week.
This uptick coincided with a drop in the 30-year mortgage rate for conforming loan balances, which fell to its most favorable level since February 2023, according to the Mortgage Bankers Association’s latest analysis. Intraday movements in the bond market reflected varying investor sentiments, with the US two-year yield increasing by 3.9 basis points to 3.65%.
Correspondingly, the 10-year yield ascended by 2.3 basis points to 3.67%, indicating shifts in market expectations regarding Treasury returns. In commodity trading, West Texas Intermediate (WTI) crude oil saw a significant leap of 3.2%, climbing to $67.87 per barrel, capturing attention amid fluctuating energy prices. Turning to specific company news, shares of Valero Energy ($VLO) experienced a notable drop of 3.5%, marking one of the steepest declines within the S&P 500.
This drop followed adjustments from Wolfe Research, which revised its price target for Valero from $176 to $169. On another note, Manchester United ($MANU) reported an increase in its fiscal fourth-quarter loss, attributed primarily to revenue declines across two of its three reportable segments. The storied British soccer club anticipates that its ongoing restructuring initiatives will adversely affect its fiscal results in 2025, leading to a 4.8% decrease in share price. Meanwhile, technology stocks displayed strength with Super Micro Computer ($SMCI) and Nvidia ($NVDA) shares rallying by 5.8% and 5.4%, respectively, making them standout performers on the S&P 500 and Nasdaq indices.
In the precious metals market, gold remained steady at $2,543 per troy ounce, while silver achieved a 1.2% rise, trading at $28.96 per ounce. Overall, the market landscape remains volatile as investors navigate through economic signals and significant corporate developments, setting the stage for upcoming policy decisions and market adjustments..