On Monday, major US benchmark equity indexes exhibited a positive trajectory, closing higher as investors digested a recent survey regarding consumer inflation expectations while anticipating vital official price growth data set to be released later in the week. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite each saw an increase of 1.2%.
Specifically, the Dow closed at 40,829.6, while the S&P 500 reached 5,471.1, and the Nasdaq concluded the trading session at 16,884.6. Meanwhile, with the exception of the communication services sector, which remained relatively unchanged, all other sectors recorded gains, led predominantly by consumer discretionary and industrial stocks. In line with economic indicators, the Federal Reserve Bank of New York reported a resurgence in US consumers' inflation expectations at the medium-term horizon for August, albeit showing flat readings in the one- and five-year outlooks.
The Fed indicated that the labor market outlook remained "mixed, but largely stable." Government data scheduled for release on Wednesday is expected to indicate a 0.2% increase in US consumer inflation on a sequential basis, while reflecting a 2.6% increase annually last month, according to consensus data compiled by Bloomberg.
Following this, the official report on producer prices for August is set to be released on Thursday. Moreover, data released on Friday from the Bureau of Labor Statistics highlighted that the US economy added fewer jobs than projected in August, coinciding with a slight decrease in the unemployment rate. Stifel's Monday note to clients emphasized, "A weaker-than-expected rise in topline hiring coupled with no further upward momentum in inflation last month seemingly solidifies the Fed's commitment to a first-round rate cut later this month.
However, the lack of meaningful downward momentum in price pressures, coupled with a downtick in the unemployment rate and stronger wage gains, seemingly removes the necessity for a more aggressive policy response in terms of either a larger rate reduction or a more expedited pathway." According to the CME FedWatch tool, the probability of a 25-basis-point interest rate cut next week increased to 71% on Monday compared to 70% on Friday, while the likelihood of a more aggressive 50-basis-point reduction decreased slightly from 30% to 29%. Treasury yields also experienced movement, with the US two-year yield rising by 2.7 basis points to 3.68% on Monday, whereas the 10-year yield declined by one basis point to settle at 3.7%. In the realm of company-specific news, Boeing ($BA) shares saw a notable increase of 3.4%, marking the second-best performance on the Dow.
The aerospace giant announced a tentative labor agreement with the International Association of Machinists and Aerospace Workers, which represents more than 33,000 employees. On the biopharmaceutical front, Moderna ($MRNA) disclosed that it had obtained Health Canada's Drug Establishment License for its production facility located in Laval, Quebec.
This announcement contributed to a 5.1% rise in its shares, ranking it among the top gainers on both the S&P 500 and the Nasdaq. Progress Software ($PRGS) confirmed its agreement to acquire ShareFile, a software-as-a-service document collaboration business, from Cloud Software Group for a substantial $875 million.
Despite this, Progress shares dipped 2.5% by the end of trading. In commodity markets, West Texas Intermediate crude oil experienced an upswing of 1.5%, settling at $68.66 per barrel as of Monday. In precious metals, gold edged up 0.4% to $2,534.60 per troy ounce, while silver climbed 1.8% to reach $28.68 per ounce. Overall, investors remain vigilant as market dynamics evolve alongside economic data releases and company performance updates, reflecting a complex interplay of inflation expectations and labor market indicators..