[New York Stock Market] Rise on Strong US Growth and Employment... S&P 500 Hits Record High

Q2 GDP Growth Rate 3%... Steady Consumption Drives Growth
Weekly Unemployment Claims Expected Below 218,000
Micron Rises on Strong Earnings... Super Micro Falls
PCE Inflation Data to Be Released on 27th

The three major indices of the U.S. New York Stock Exchange closed higher on the 26th (local time). Strong economic indicators such as the second-quarter economic growth rate and a decrease in unemployment claims confirmed a robust economic situation, spreading expectations of a soft landing and supporting investor sentiment.

On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 42,175.11, up 260.36 points (0.62%) from the previous trading day. The large-cap-focused S&P 500 index rose 23.11 points (0.4%) to close at 5,745.37, setting a new all-time high. The tech-heavy Nasdaq index ended the day at 18,190.29, up 108.09 points (0.6%).

By individual stocks, U.S. semiconductor company Micron surged 14.73% after announcing earnings and sales forecasts that exceeded market expectations. Other semiconductor stocks Applied Materials and Lam Research rose 6.23% and 5.44%, respectively. Qualcomm increased by 2.61%, and Intel rose 1.61%. Super Micro Computer plummeted 12.17% following news that the U.S. Department of Justice has launched an investigation into accounting fraud.

The economic indicators released that morning reaffirmed the solid growth momentum of the U.S. economy. The U.S. Department of Commerce announced that the final real Gross Domestic Product (GDP) growth rate for the second quarter of this year was 3% annualized compared to the previous quarter. This matched the preliminary figure and market expectations. It is nearly double the first quarter's 1.6% and significantly exceeds the U.S. potential growth rate, estimated to be in the high 1% range. Contrary to concerns about a decline in household consumption expenditure, the U.S. economy maintained robust growth in the second quarter, supported by strong consumer spending. Additionally, the Department of Commerce revised the first-quarter growth rate upward from the previously announced 1.4% to 1.6%. This adjustment was due to downward revisions in private inventory investment and residential fixed investment but an upward revision in personal consumption.

Last week’s unemployment claims decreased compared to the previous week. According to the U.S. Department of Labor, new unemployment claims for the week of September 15?21 totaled 218,000. This was 40,000 fewer than the revised figure of 222,000 for the prior week and below the expert forecast of 224,000. Continuing claims, which count those claiming unemployment benefits for at least two consecutive weeks, reached 1,834,000 for the week of September 8?14. This exceeded both the revised prior week figure of 1,821,000 and the market expectation of 1,828,000.

Chris Larkin, Head of Trading and Investment at Morgan Stanley E*TRADE, said, "Even if there are problems in the labor market, they may not show up in weekly unemployment claims, and as always, the monthly jobs report will play a significant role in market sentiment." However, he added, "Until contrary evidence emerges, these (unemployment claims) figures will maintain hopes for a soft landing."

Peter Chia, Chief Macro Strategist at Academy Securities, stated, "Economic indicators suggest the market may expect more resilience than anticipated, especially in employment."

The market is focusing on the August Personal Consumption Expenditures (PCE) price index, which will be released on the 27th. The PCE price index for last month is expected to have risen 0.1% month-over-month and 2.3% year-over-year. If the pace of PCE inflation slowdown eases rapidly, expectations for a significant rate cut by the U.S. Federal Reserve (Fed) in November are likely to spread further.

Vanguard’s Chief Economist Joe Davis said, "The Fed is more concerned about growth than they have revealed, and we believe they will act more aggressively in the short term."

Investor expectations on the size of the rate cut at the next Federal Open Market Committee (FOMC) meeting are sharply divided. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market on that day reflected a 51.3% probability that the Fed will cut rates by 0.5 percentage points at the November FOMC meeting and a 48.7% probability of a 0.25 percentage point cut.

Government bond yields are on the rise. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 1 basis point to 3.8%, while the 2-year Treasury yield, sensitive to monetary policy, increased 6 basis points to 3.61% compared to the previous day.

International oil prices fell following reports of production increase plans by eight OPEC+ countries, including Saudi Arabia and Russia. West Texas Intermediate (WTI) crude oil closed at $67.67 per barrel, down $2.02 (2.9%) from the previous trading day, while Brent crude, the global oil price benchmark, ended at $71.60 per barrel, down $1.86 (2.53%).