On Thursday, US benchmark equity indexes closed higher, marking a day of positive movement as markets thoroughly assessed recent economic data, including the official producer prices report for August. This upward trend across the board was evidence of investors digesting the implications of the latest statistics while alignment seemed plausible for a tempered economic policy ahead. The Nasdaq Composite experienced a notable increase of 1%, closing at 17,569.7.
Similarly, the S&P 500 advanced 0.8% to settle at 5,595.8. Not to be outdone, the Dow Jones Industrial Average gained 0.6%, finishing at 41,096.8. Impressively, all sectors recorded gains, with communication services leading the charge with a remarkable surge of 2%. Digging into the economic landscape, it was reported that producer prices in the US saw a larger-than-anticipated growth last month.
The rebound in wholesale services costs contributed significantly to this rise, as indicated by the Bureau of Labor Statistics (BLS). Additionally, data released on Wednesday revealed that US consumer inflation met expectations in August, showcasing a sequential increase, whereas the annual inflation metric registered the smallest increment since February 2021, highlighting a potentially stabilizing economic environment. The recent Producer Price Index (PPI) and consumer price index data suggest a pressing need for a restrained approach to policy easing by the Federal Reserve, as communicated by Stifel in a note directed at its clients.
This prudent stance is likely to steer economic conditions toward sustainable growth moving forward. In labor market news, weekly applications for unemployment insurance in the United States experienced an unexpected rise, further emphasizing the mixed signals in the economy as policymakers navigate these challenges. Market sentiments reflected a shift in expectations regarding interest rates.
The likelihood of an imminent 25-basis-point interest-rate cut, originally predicted for Wednesday, fell to 67% from 86% a day prior. Conversely, the probability of a more assertive 50-basis-point reduction increased notably to 33% from just 14%, as per data from the CME FedWatch tool, illustrating changing dynamics in investor outlooks. In terms of yields, the US 10-year yield increased by 3.2 basis points to 3.69%, while the two-year rate saw a smaller uptick of 1.6 basis points, closing at 3.66%.
These movements in yields indicate a responsive market in light of the new data and expectations. Turning the focus to corporate news, Warner Bros. Discovery ($WBD) recently announced a multi-year distribution agreement with Charter Communications ($CHTR) which aims to integrate linear video with streaming services.
This strategic partnership led to Warner Bros. shares soaring by an impressive 10%, making it the best performer on both the S&P 500 and the Nasdaq markets. Charter also reflected positive movement, rising 3.6%, making it one of the top gainers on the Nasdaq. Kroger ($KR), positioned as the second-best performer on the S&P 500, saw a robust increase of 7.2% after the grocery giant upgraded the midpoint of its full-year identical sales forecast, despite reporting mixed results for the second quarter. Conversely, Moderna ($MRNA) announced plans to reduce its research and development expenditures as it seeks to optimize costs and realign its focus on launching products that are already in the pipeline.
This decision translated into a sharp fall in the drugmaker's stock by 12%, marking the steepest decline on the S&P 500 and the Nasdaq. Meanwhile, in the commodities sector, West Texas Intermediate crude oil prices surged by 2.9%, reaching $69.23 a barrel. This price increase followed the International Energy Agency's (IEA) decision to lower its global oil demand growth outlook for 2024, primarily due to weakness in the Chinese market. "With the steam seemingly running out of Chinese oil demand growth and observing only modest increases or declines across most other countries, the current trends support our expectation that global demand will plateau by the end of this decade," articulated the IEA, highlighting the shifting landscape of global oil consumption. In related news, on Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) revised its world oil demand projections for 2024 and 2025 downwards, a decision reflective of the ongoing concerns in the market. Investors also saw gold prices rise by 1.7% to $2,586 per troy ounce, while silver advanced 4.4%, reaching $30.21 per ounce, signaling a growing interest in precious metals amidst fluctuating market conditions.
In summary, major corporations like Warner Bros. Discovery ($WBD), Charter Communications ($CHTR), Kroger ($KR), and Moderna ($MRNA) are navigating a complex economic environment, while broader market trends indicate cautious optimism moving forward. As signals emerge regarding inflation, consumer behavior, and corporate performance, stakeholders remain focused on potential implications for investment and economic growth strategies in the near future..