The S&P 500, a representative benchmark of the stock market, showed a minimal change recently. Amid this stillness, shares of Nvidia Corp. took a downward trajectory, triggered by a less than favorable projection. While an overall sense of tranquility encapsulated Wall Street, stocks lingered near their record peaks. The calmness mirrored data reports that underscored the resilience of the economy just before the introduction of a pivotal inflation report.
Bonds demonstrated mixed performance, while the US dollar experienced a slight dip. In the lead-up to the release of the inflation yardstick preferred by the Federal Reserve, freshly released data indicated that the United States’ economic growth rate had slightly outpaced previous estimations in Q2. This acceleration in growth could be attributed to a resurgence in business investment activity and an unexpected uplift from trade.
The economy seems to be functioning at full steam, which should instill confidence in the markets that any fears related to tariffs in the earlier phases of the year were somewhat overblown. Nonetheless, markets have precariously balanced the likelihood of a rate cut by the Federal Reserve in September. Thus, it remains crucially important for inflation numbers not to surge between this period.
An anticipated report on Friday might show that an important inflation index known as the personal consumption expenditures price index (excluding food and energy) reportedly climbed by 2.9% in July, compared to the same period from a year ago. If true, this would represent the speediest annualized rate witnessed in the past five months, making its implications noteworthy.
Investors remain on high alert, keeping a close eye on any comments from Federal Reserve officials to decipher their willingness to cut rates in September. In yet another economic measure, the inflation-adjusted gross domestic product showcasing the value of goods and services produced within the country showed a 3.3% annual growth. This was a slight nudge up from the 3% increase that had been reported initially.
For Bret Kenwell from eToro, the GDP data acted as a soothing balm for worries that the US economy might be precariously balanced on the brink of a recession. The figures might not dazzle the investors, but they do highlight the resilience of the consumer. This perception is being mirrored in recent retail sales reports and narratives from corporations during their earnings calls.
Peering into the future, Kenwell suggests that matching or lower PCE results could act as a solid foundation, cementing investors’ belief in a September rate cut. However, a higher-than-anticipated inflation figure might temper enthusiasm, while not necessarily eliminating the potential for a rate cut in the ensuing month, it could dampen Wall Street’s spirits toppling it into a state of inflation anxiety.
Additional data disclosed on Thursday pointed to a nominal decrease in initial jobless claim numbers last week. The figures suggested that companies are choosing to retain their workforce in the face of any potential economic headwinds. A snapshot of the stock activity as of 9:47 a.m. Eastern Time showed that the S&P 500 remained largely unchanged.
A quick scan of the other indices showed that the Nasdaq 100 saw a minor upswing, rising by 0.2%, while the Dow Jones Industrial Average slipped by a similar percentage. The Stoxx Europe 600 index also slid by 0.2%. On a more upbeat note, both the MSCI World Index and the Russell 2000 Index showed slight uplifts of 0.2% and 0.1% respectively.
Nvidia stocks had a slight fall, slipping by 0.8%. In terms of currencies, the euro showed a marginal appreciation, increasing by 0.2% to touch $1.1663. The British pound remained largely unaffected, holding steady at the $1.3494 mark. The Japanese yen edged upward by 0.2%, pitched at 147.17 per dollar.
The yield on 10-year US Treasury bond inched forward by a single basis point to stand at 4.24%. In contrast, Germany’s 10-year yield remained unchanged at 2.71%, and Britain’s 10-year yield dipped slightly, receding by two basis points to 4.72%. The yield on 2-year US Treasury bonds also rose, advancing by four basis points to hit the 3.65% mark.
In contrast, the yield on 30-year Treasuries slid down by a single basis point, finishing up at 4.91%. In the commodity market, West Texas Intermediate crude took a slight dip, falling 0.5% to settle at $63.85 per barrel. Nudging in the opposite direction, spot gold saw a minor increase of 0.3%, marking up at $3,406.41 per ounce.
In conclusion, the economic data paints a picture of a resilient US economy, with steady consumer confidence, which should assuage any fears of imminent recession. However, investors continue to tread carefully, balancing market optimism with the potential warning signs of growing inflation. The months ahead will be crucial in revealing whether this economic balance can be maintained, giving us much to watch for in the ongoing saga of economic indicators.
The post Wall Street Calm Amid Mixed Economic Indicators appeared first on Real News Now.
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