On Thursday, US benchmark equity indexes experienced notable increases as investors processed the latest economic data. This included the official producer prices report for August, which indicated stronger than anticipated growth in wholesale service costs. The Nasdaq Composite posted a significant rise of 1%, climbing to 17,569.7.
In a similar vein, the S&P 500 advanced by 0.8%, settling at 5,595.8, while the Dow Jones Industrial Average improved by 0.6%, reaching 41,096.8. Every sector concluded the day on a positive note, with communication services leading the way with an impressive 2% jump. In further economic developments, the Bureau of Labor Statistics reported that producer prices in the United States exceeded expectations last month, driven largely by a rebound in wholesale services costs.
This report followed previous data released Wednesday, showing expected consumer inflation rises for August, with an annualized metric recording the smallest increase since February 2021. These trends in producer and consumer prices highlight the need for a careful approach to policy adjustments by the Federal Reserve.
A recent note by Stifel indicated that a 'tempered path of policy easing' may be necessary in light of the underlying data. Meanwhile, the US labor market showed unexpected shifts, with weekly applications for unemployment insurance increasing, as revealed by government data. This has impacted market sentiment and expectations regarding Federal Reserve actions. The probability of a 25-basis-point interest-rate cut from policymakers dropped to 67% on Thursday from 86% the previous day.
Conversely, the likelihood of a more aggressive cut of 50 basis points climbed to 33%, up from 14%, according to the CME FedWatch tool. In the bond market, the US 10-year Treasury yield rose by three basis points to 3.68%, and the two-year rate ticked up one basis point to 3.65%. Turning to corporate news, Warner Bros.
Discovery ($WBD) announced a multiyear distribution agreement with Charter Communications ($CHTR), aimed at integrating their linear video and streaming services. As a result, Warner Bros. shares surged by 10%, marking the best performance on both the S&P 500 and Nasdaq indices, while Charter shares increased by 3.6%, contributing to their strong performance on the Nasdaq. Another notable performer, Kroger ($KR), recorded a 7.2% jump, becoming the second-top performer on the S&P 500 after the grocery giant raised the midpoint of its full-year identical sales forecast, even amid mixed second-quarter results. In contrast, Moderna ($MRNA) experienced a significant drop in shares, plunging by 12%.
The drugmaker announced plans to reduce its research and development expenditures as it aims to cut costs and focus on the launch of upcoming products in its pipeline. In the commodities market, West Texas Intermediate crude oil witnessed a rise of 2.8%, closing at $69.2 a barrel. This increase follows a reduction in the International Energy Agency's (IEA) outlook for global oil demand growth in 2024, primarily due to weaker demand from China. The IEA stated, 'With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade.' This outlook echoes similar adjustments made by the Organization of the Petroleum Exporting Countries (OPEC), which recently lowered its world oil demand forecasts for 2024 and 2025. Additionally, precious metals have seen movements in the market, with gold rising by 1.8% to $2,587.60 per troy ounce and silver advancing by 4.4% to $30.21 per ounce..