[New York Stock Market] Nvidia Surges 8%, Leading Broad Gains... Nasdaq Up 2.17%

NVIDIA Rises as US Government Reviews Saudi Export Approval
Core CPI Exceeds Expectations, Dimming Big Cut Hopes

The three major indices of the U.S. New York Stock Exchange all closed higher on the 11th (local time). After the release of the August Consumer Price Index (CPI), the market, which initially fell due to fading expectations of a 'big cut' (a 0.5 percentage point interest rate cut), successfully rebounded sharply, supported by a surge in tech stocks such as Nvidia, which rose 8%.

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On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 40,861.71, up 124.75 points (0.31%) from the previous trading day. The large-cap-focused S&P 500 index rose 58.61 points (1.07%) to 5,554.13, and the tech-heavy Nasdaq index gained 369.65 points (2.17%) to close at 17,395.53.

The market started the day on an uneasy note. The U.S. Department of Labor announced that the August CPI rose 2.5% year-over-year, marking the lowest level in 3 years and 6 months since February 2021. This matched market expectations (2.5%). Month-over-month, it rose 0.3%, matching both the forecast (0.2%) and the previous month's figure (0.2%).

The core CPI, which excludes the volatile energy and food sectors to show the underlying inflation trend, rose 0.3% month-over-month and 3.2% year-over-year. Experts had predicted increases of 0.2% and 3.2%, respectively, so the month-over-month rise exceeded expectations. The problem was housing costs, which increased 0.5% month-over-month, expanding from July's 0.4% rise.

Although the CPI met expectations, the core CPI slightly exceeding forecasts led the market to believe that a big cut at the Federal Open Market Committee (FOMC) regular meeting scheduled for the 17th-18th is unlikely. The interest rate futures market currently reflects an 85% chance of a 0.25 percentage point rate cut by the Fed in September and a 15% chance of a 0.5 percentage point cut. Just the day before, the probability of a big cut was 34%, but it plunged 19 percentage points in one day.

Steve Sosnick, chief strategist at Interactive Brokers, said, "Looking at the CPI data alone, it is not bad," but added, "The higher-than-expected core CPI was a figure the market did not need. It doused the hopes of a 50bp (1bp=0.01 percentage point) rate cut, and those expectations have completely disappeared."

However, in the afternoon, the mood reversed as tech stocks, led by Nvidia, rose. Reports emerged that the U.S. government is considering allowing Nvidia to export advanced artificial intelligence (AI) chips to Saudi Arabia, causing Nvidia to surge 8.15%. U.S. semiconductor companies AMD rose 4.91%, Intel and Qualcomm increased by 3.48% and 3.02%, respectively. Financial stocks, which had fallen the previous day, also rebounded, contributing to the market recovery. JPMorgan Chase rose 0.81%, and Goldman Sachs increased 0.86%.

Trump Media & Technology Group (TMTG), the parent company of Truth Social, the social networking service of former U.S. Republican presidential candidate Donald Trump, fell 10.47%. The decline was driven by analyses that Trump lost the presidential debate held the previous day to Democratic candidate Vice President Kamala Harris.

The major indicator to be released this week is the August Producer Price Index (PPI), scheduled for the 12th, one day later. The wholesale price index PPI, which affects the retail price CPI with a time lag, is expected to rise 0.2% in August compared to the previous month, slightly exceeding July's increase of 0.1%.

U.S. Treasury yields are rising slightly. The 10-year U.S. Treasury yield, a global bond yield benchmark, is trading at 3.65%, up 1bp (1bp=0.01 percentage point) from the previous trading day, while the 2-year U.S. Treasury yield, sensitive to monetary policy, is trading at 3.64%, up 3bp from the previous day.

International oil prices, which plunged the previous day due to concerns over weakening Chinese demand, rose on expectations of production disruptions caused by a hurricane landing in the U.S. West Texas Intermediate (WTI) crude oil rose $1.56 (2.37%) to $67.31 per barrel, and Brent crude, the global oil price benchmark, increased $1.42 (2.05%) to close at $70.61 per barrel.