Stocks of energy producers also rose, thanks to another rally for oil prices. The strong welcome could be an encouraging signal for the IPO market, which has slowed since the stock market began tumbling early last year on fears about higher interest rates. In the stock market, shares of chip designer Arm Holdings jumped 24.7% in their debut. “The Fed is still likely to remain on hold next week, but if the economy continues to surprise to the upside, all bets are off as to what they’ll do after their final two policy meetings of the year,” he said. Hopes that the Fed may be done hiking rates may be overdone, warned Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. Traders pared back expectations for the Fed to raise rates again some time this year, though they’re still betting on a roughly 40% chance of that, according to data from CME Group. It ended up rising to 5.00% from 4.98% late Wednesday. The two-year Treasury yield, which more closely tracks expectations for the Fed, also bounced around following the reports. That echoed a report from a day earlier on inflation at the consumer level, which showed overall inflation accelerated to 3.7% in August largely because of a leap in fuel prices.Īfter a few swings up and down through the day, the yield on the 10-year Treasury rose to 4.29%, up from 4.25% late Wednesday.
Ignoring those and other particularly volatile prices, underlying inflation trends in Thursday’s report were closer to economists’ expectations. But economists pointed out much of last month’s acceleration in wholesale inflation was due to higher fuel prices, which can shift direction sharply and quickly. Treasury yields initially jumped following Thursday’s reports on fears they could push the Fed to raise rates again or at least to keep rates higher for longer. The hope on Wall Street is that a slowdown in inflation since last summer means the Fed is done with its rate hikes, which slow the economy and hurt investment prices. To try to get inflation back down to its 2% target, the Federal Reserve has been increasing interest rates sharply since early last year. That could be a discouraging signal for households if the higher-than-expected inflation gets passed on to shoppers at the consumer level. A separate report Thursday morning said fewer workers applied for unemployment benefits last week than expected, which implies the number of layoffs remains low.Ī third report said prices getting paid at the wholesale level rose more last month than economists expected. The strong spending is a result of a remarkably resilient job market, which has withstood a steep jump in interest rates.
Such spending has been a linchpin for the economy, but it could also encourage retailers to keep trying to raise prices further. shoppers spent more at retailers last month than economists expected. economy will avoid a deep recession, the strength underlying them could also add upward pressure on inflation.
While the reports bolstered hopes the U.S. Some of the strongest action was in the bond market, where Treasury yields swung up and down several times. The Dow Jones Industrial Average rallied 331 points, or 1%, and the Nasdaq composite added 0.8%. The S&P 500 climbed 0.8% for its best day in two weeks. economy is still humming, though inflation may be too. NEW YORK (AP) - Wall Street rose Thursday after a blizzard of reports suggested the U.S.
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