The Best Investment Manager’s Market Report: Nasdaq and S&P 500 Surge as Inflation Data Points to Potential Fed Rate Cut
At market close, the Dow Jones Industrial Average was up 0.3 percent to 40,862, while the tech-heavy Nasdaq Composite strengthened by 2.2 percent to 17,396. The broad S&P 500 increased by 1.1 percent to 5,554, equivalent to a 2.2 percent rise from the Stockholm Stock Exchange’s closing.
In the afternoon, US inflation statistics showed that core CPI rose by 0.3 percent in August, slightly higher than the expected increase of 0.2 percent. This outcome does not eliminate the prospects of a Federal Reserve rate cut next week, but it now indicates more towards a 25-point cut than a 50-point cut, according to most analysts.
In the bond market, the US ten-year yield rose by 1 basis point to 3.65 percent.
Technology-related sectors were the clear winners on Wednesday, with an average increase of 3.3 percent within the S&P 500. Chip developer Nvidia saw an 8.0 percent surge, while Apple, Alphabet, and Microsoft rose by 1.1-2.2 percent.
Investors also continued to interpret the effects of the debate between Kamala Harris and Donald Trump, with early assessments suggesting that the current vice president’s chances of winning the election in November have been strengthened.
Donald Trump’s social media company, Trump Media & Technology, fell by 10 percent following the debate, where he was perceived as the loser by a majority in a CNN survey. Results showed that 63 percent of respondents believed Kamala Harris had the better debate performance, while 37 percent favored Donald Trump’s appearance.
A number of solar energy stocks strengthened as investors favored Kamala Harris, who expressed support for “various energy sources” to reduce US dependence on foreign oil. In the sector, First Solar and Enphase Energy rose by approximately 15 and 5.7 percent, respectively.
Furthermore, meme stock Gamestop traded down by 12 percent. The video game retailer announced plans to issue up to 20 million shares, with its second-quarter report also showing a decline in sales.
Investment bank Morgan Stanley recovered from an initial drop triggered by Goldman Sachs downgrading the stock to neutral from buy. The stock managed to close up by 0.5 percent.
Analysis: The stock market saw a positive day with tech stocks leading the gains. Inflation data and the upcoming Fed meeting are key factors influencing investor sentiment. The debate between Kamala Harris and Donald Trump also had ripple effects on certain sectors, such as solar energy. Understanding these market dynamics can help individuals make informed decisions about their investments and financial future.