US Stock Markets Backed by Fed Rate Cut Hopes
On Wednesday, US stock indexes closed mixed: the S&P 500 rose +0.30% to a new all-time high, the Nasdaq 100 added +0.04%, while the Dow Jones slipped -0.48%. September S&P 500 and Nasdaq futures also ended higher. Markets found support as Treasury yields fell after softer-than-expected US producer price (PPI) data for August reinforced expectations of Federal Reserve rate cuts.
Price Pressures and Fed Outlook
The PPI eased to +2.6% y/y, below forecasts. This strengthened investor confidence that the Fed will soon move toward policy easing: markets now see a 100% chance of a -25 bp cut at the September 16–17 FOMC meeting, and a 10% chance of a -50 bp cut. By year-end, traders are pricing in a total of -73 bp in rate cuts, bringing the federal funds rate to around 3.65%. Meanwhile, the 10-year Treasury yield dropped to a five-month low of 4.03%.
Stock Winners and Losers
Oracle surged +35% after issuing a bullish cloud business forecast driven by AI infrastructure demand, fueling a rally across the sector. CoreWeave jumped +17%, Broadcom +9%, Nvidia +3%, while Vertiv and Vistra gained over +8%.
On the downside, Synopsys plunged -35% after a weak earnings forecast, Chewy lost -16%, and Apple fell -3% on disappointment with its new iPhone, Apple Watch, and AirPods launch. Salesforce dropped -3% as Oracle’s results highlighted weakness in traditional software demand.
Notable movers included Travere Therapeutics (+26%) after positive FDA news, GameStop (+3%) on stronger Q2 sales, and Johnson Controls (+1%) after a dividend hike. Meanwhile, Trade Desk (-11%) and HP (-2%) declined following analyst downgrades.
Geopolitics and Global Markets
Geopolitical risks weighed on sentiment as Poland shot down drones crossing its territory during Russia’s latest strike on Ukraine, calling it an “act of aggression.” In China, deflation concerns deepened: CPI fell -0.4% y/y and PPI -2.9% y/y, marking the 35th consecutive monthly drop in producer prices.
In Europe, the Euro Stoxx 50 slipped -0.14%. Asian markets were more positive, with the Shanghai Composite up +0.13% and Japan’s Nikkei 225 gaining +0.87%.
Markets are caught between hopes for Fed easing and fears of global economic slowdown. Falling inflation pressures and strong AI-sector growth are offsetting weakness in traditional tech and geopolitical concerns. Investors now turn to Thursday’s US CPI release, a key data point ahead of next week’s Fed meeting.
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