S&P 500, Nasdaq and Dow Eke Out Small Gains in Mixed Session
US Stock Market Key Points:
• The S&P 500, Dow, and Nasdaq 100 manage to finish in positive territory in a relatively choppy session
• Investors remain concerned about the inflation outlook
• All eyes are on tomorrow’s US Retail Sales and next week’s FOMC monetary policy decision
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Most Read: S&P 500, Nasdaq 100 Post Modest Gains Following Tumultuous Tuesday
U.S. equity indices could not find a clear direction on Wednesday and, after a choppy session, ended with marginal gains. Investors assessed a new set of in-line inflation numbers today, following yesterday's disappointing CPI release, which triggered the biggest drop in two years.
At the close, the Dow and the S&P 500 ended in positive territory, closing 0.10% and 0.34%, respectively. Leading some of the gains were the consumer discretionary sector,boosted by news of Starbucks raising its guidance; and the energy sector, as oil prices staged a moderate rally after an IEA report said that demand is likely to remain strong as some consumers switch from natural gas to oil. Also, a higher-than-expected decline in gasoline inventories supported the price of the commodity. Meanwhile, the underperforming sector of the S&P 500 was real estate. Rising interest rates and supply constraints in an already expensive housing market are putting downward pressure on demand.
On the same note, the Nasdaq 100 managed to end in positive territory, rising 0.74% after the pharmaceutical company, Moderna, announced its willingness to supply Covid vaccines to China.
S&P 500 (ES) Daily Chart
S&P 500 (ES) Mini Futures Daily Chart Prepared Using TradingView
On the economic front, the August PPI report was released today. While the headline index for wholesale prices showed an expected decline on a year-over-year basis, the core gauge came in slightly higher than anticipated, setting an overall cautious tone on Wall Street, but nothing like the episode witnessed on Tuesday.
Yesterday’s CPI results triggered a major selloff in equity indices because traders have been waiting for information that could lead to a “policy pivot” by the FOMC, but the data surprised to the upside, catching speculators on the wrong side of the trade and forcing them to quickly exit their positions, a situation that likely exacerbated the rout.
Next week, when the FOMC announces its September interest rate decision and releases its new summary of economic projections, we will have a better idea of how policymakers will respond to recent inflation developments. The market expects to see another 75 basis point increase in borrowing costs, but some banks now anticipate a 100 basis point adjustment.
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---Written by Cecilia Sanchez-Corona, Research Team, DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.