[New York Stock Market] Confirming Inflation Slowdown, Broad Rise... Nasdaq Up 1%

US August PPI Up 0.2% MoM as Expected
New and Continuing Unemployment Claims Rise Week-on-Week
Big Tech Gains Amid Confidence in Rate Cuts

The three major indices of the U.S. New York Stock Exchange all closed higher on the 12th (local time). Investors, having confirmed a trend of easing inflation through August inflation data, confidently anticipated an interest rate cut this month and moved to buy big tech stocks.

On that day in the New York stock market, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 41,096.77, up 235.06 points (0.58%) from the previous trading day. The S&P 500, focused on large-cap stocks, rose 41.63 points (0.75%) to 5,595.76, and the tech-heavy Nasdaq index ended trading at 17,569.68, up 174.15 points (1%).

The tech stock rally was prominent. Nvidia, which surged more than 8% the previous day, rose 1.92%. Alphabet, Google's parent company, and Meta, Facebook's parent company, increased by 2.23% and 2.69%, respectively. Trump Media & Technology Group (TMTG), the parent company of Truth Social, a social networking service owned by former U.S. Republican presidential candidate Donald Trump, fell 3.63% after dropping more than 10% the previous day. This was seen as a negative factor for the stock following the presidential debate on the 10th, where Democratic candidate Vice President Kamala Harris was evaluated to have performed well.

The inflation data released that morning met expectations and supported the trend of easing inflation. According to the U.S. Department of Labor, the Producer Price Index (PPI) for August rose 0.2% month-over-month, matching the Dow Jones experts' forecast (0.2%). This was a slight increase compared to July (0%). The PPI rose at an annual rate of 1.7% over the past 12 months, significantly easing from 2.1% in July. The core PPI, which excludes volatile food and energy prices and shows the underlying trend of inflation, rose 0.3% month-over-month in August. This exceeded both the expert forecast (0.2%) and July's figure (-0.2% decline).

The wholesale price index, PPI, is considered a leading indicator of retail prices as it affects the Consumer Price Index (CPI) with a time lag. Since May, the month-over-month increase in PPI has remained between 0% and 0.2%, supporting the recent trend of easing inflation. The U.S. August CPI, released the previous day, rose 2.5% year-over-year. It continued a five-month slowdown, marking the lowest level in three and a half years since February 2021.

Peter Tozzi, CEO of Chase Investment Counsel, said, "Both retail and wholesale prices have eased, reducing the possibility of a hard landing and indicating a soft landing process." He added, "If investors expect an interest rate cut, they will be excited about the stock market outlook, especially for growth stocks."

The labor market showed signs of cooling. According to the U.S. Department of Labor, new unemployment claims for the week of September 1?7 totaled 230,000, an increase of 2,000 from the revised figure of 228,000 the previous week. This exceeded the expert forecast of 227,000 by 3,000. Continued claims for unemployment benefits, which count those claiming benefits for at least two weeks, were 1.85 million for the week of August 25?31, up 5,000 from the revised 1.845 million the previous week. This was in line with market expectations of 1.85 million.

The market is focusing on how much the Federal Reserve will cut interest rates at the Federal Open Market Committee (FOMC) meeting scheduled for the 17th?18th. Currently, the interest rate futures market reflects a 63% probability of a 0.25 percentage point rate cut this month and a 37% chance of a 0.5 percentage point cut.

Government bond yields are rising slightly. The 10-year U.S. Treasury yield, a global bond yield benchmark, rose 2 basis points (1 bp = 0.01 percentage points) from the previous trading day to 3.67%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, traded around the previous day's level of 3.65%.

International oil prices rose due to concerns over production disruptions caused by a hurricane in the U.S. West Texas Intermediate (WTI) crude oil increased $1.66 (2.5%) from the previous day to $68.97 per barrel, and Brent crude, the global oil price benchmark, rose $1.36 (1.9%) to $71.97 per barrel.