On September 11, 2023, Wall Street's main indexes experienced significant gains, reaching record highs. This upward momentum was primarily driven by strong performances from Tesla and Micron Technology, following the release of U.S. inflation and jobless data that bolstered market expectations for an upcoming interest rate cut by the Federal Reserve. The S&P 500 rose by 0.80%, while the Nasdaq increased by 0.71%, and the Dow Jones Industrial Average surged by 1.35%.
The U.S. consumer price index (CPI) reported a monthly increase of 0.4% for August, surpassing the anticipated 0.3%. This marked the largest annual rise in inflation in seven months, adding to concerns about persistent price increases. In addition to inflation data, initial jobless claims for the week ending September 6 reached 263,000, a near four-year high. Atsi Sheth, Chief Credit Officer at Moody’s Ratings, commented on the unusual economic climate, suggesting that while some might categorize this as stagflation, the peculiar combination of a slowing job market and steady inflation presents a challenging scenario.
Sheth predicts that the Federal Reserve will likely reduce interest rates by 25 basis points in the upcoming meeting, with another potential cut by the end of the year. Futures trading indicates a strong likelihood that the Fed will implement at least a 25 basis point cut, with a slight 7% chance of a more substantial 50 basis point reduction. This follows a series of disappointing labor market reports and a cooler-than-expected producer inflation reading.
Tesla (TSLA.O) saw a notable 5% increase in its stock price, contributing to the overall rise of the S&P 500 and Nasdaq. Meanwhile, Micron Technology (MU.O) surged over 9% to reach $153 after Citigroup raised its price target for the memory chipmaker from $150 to $175. This positive outlook also helped the Philadelphia SE Semiconductor Index (.SOX) climb 0.9%, achieving an all-time high.
In other notable market activity, Warner Bros Discovery (WBD.O) skyrocketed 31% after reports surfaced that Paramount Skydance (PSKY.O) is preparing a majority cash bid for the struggling media giant. Additionally, Centene (CNC.N) jumped 12% after the health insurer reaffirmed its annual profit forecast and stated that its Medicare plans' quality ratings met expectations.
Overall, ten of the eleven S&P 500 sector indexes reported gains, with the materials sector (.SPLRCM) leading at 1.92% and consumer discretionary (.SPLRCD) following closely with a 1.78% increase. In contrast, Oracle saw a 3% decline as it relinquished some of the gains from a previous 36% surge, which had fueled Wall Street's AI rally. Delta Airlines (DAL.N) also reported a 1.7% decline after reaffirming its annual profit forecast.
In a positive sign for the market, advancing issues outnumbered declining ones within the S&P 500 by a 7.5-to-one ratio. The S&P 500 recorded 36 new highs and only 4 new lows, while the Nasdaq noted 129 new highs against 39 new lows, indicating a robust trading day.
Reporting by Purvi Agarwal and Shashwat Chauhan in Bengaluru, and by Noel Randewich in San Francisco; Editing by Pooja Desai and Maju Samuel. Additional reporting by Davide Barbuscia in New York; Editing by David Gregorio. Our Standards: The Thomson Reuters Trust Principles.
