The session results indicate that the Dow Jones Industrial Average rose by 1.36% to 46,108.00 points, the Nasdaq increased by 0.72% to 22,043.07 units, and the S&P 500 gained 0.85% to 6,587.47.
“Investors breathed a sigh of relief,” commented Adam Sarhan of 50 Park Investments in remarks to the AFP.
The issue: “The economic data on employment (…) reinforce the likelihood of a decrease in the benchmark interest rate by the end of the year and beyond,” summarized Jose Torres of Interactive Brokers.
Investors focused their attention on the weekly unemployment benefit claims, which were the highest since 2021.
While analysts expected stabilization, the numbers indicated an increase to 263,000.
Meanwhile, the August consumer price index showed a rise of 0.4%, double the 0.2% seen in July, according to the Department of Labor, exceeding analysts’ expectations.
Year-on-year, inflation also accelerated to 2.9%, after 2.7% in the previous month, this time in line with analysts’ expectations.
The vast majority of traders anticipate that the Fed will cut its benchmark interest rate by a quarter of a percentage point during its next meeting, scheduled for September 16 and 17.
This is not because inflation appears controlled, but rather because the labor market seems fragile.
Investors also expect additional rate cuts during the Fed’s meetings in October and December, potentially setting the reference range between 3.50% and 3.75%.
“If the Fed lowers the rate, the cost of business activities decreases,” which “simultaneously stimulates the real economy and Wall Street,” highlighted Sarhan, explaining the stock market enthusiasm observed.
