Market Update: Cooler Inflation Sparks Tech Rally
On Wednesday, inflation data revealed a slower-than-anticipated increase, with the Core PCE rising only 0.2% in August, leading to a year-over-year rate of 3%. Expectations had been set at 0.3% and 3.3%, respectively. This surprising data resulted in a shift of the anticipated next Federal Reserve rate hike from October to December, causing Treasury yields to drop.
The Nasdaq Composite Index climbed by 1.1%, driven largely by six major tech stocks, contributing 1.11 percentage points to the index’s gain. Alphabet surged by about 3.1%, Apple rose 2.4%, and Nvidia, Microsoft, and Amazon also posted gains. In contrast, the Dow Jones Industrial Average remained flat, reflecting a more balanced performance among its 30 components.
Despite the positive inflation news, analysts warn that future readings may increase due to surging diesel prices. The second-quarter growth revision to 2.2% signifies a strong economy, but consumer income growth was only 0.2%, while spending jumped by 0.9%. This upcoming Friday will feature the September jobs report, which is expected to further influence market sentiments.
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