Wall Street advanced on Wednesday after a batch of economic data cut the odds of an October Fed rate hike. The S&P 500 traded up 0.3% to 7,694.26 points, while the Nasdaq Composite rose 0.8% and the Dow Jones Industrial Average slipped 0.4%.
Rate hike odds drop after cooler inflation data
Traders pared bets on another Federal Reserve rate increase after a deluge of economic data landed on Wednesday. The probability of a quarter-point hike next month fell to about 37% from nearly 51% the previous day, according to the CME FedWatch tool.
The headline personal consumption expenditures price index, the Fed's preferred inflation gauge, rose 0.3% month-over-month and 3.4% year-over-year in August, below the estimated 0.4% and 3.7%. On a core basis, the price index increased 0.2% month-over-month and 3% year-over-year, also under consensus.
Meanwhile, the Bureau of Economic Analysis revised second-quarter GDP growth up to 2.2% from 1.5%, against economist expectations of 1.5%. ADP's private employment report showed 90,000 jobs added in September, up from just 36,000 in August, the first acceleration in hiring since May.
According to Investing.com: "a soft landing signal", Chris Osmond, chief investment officer at Fifth Third Wealth Advisors, said of the combination of stronger growth, cooling inflation and labor market resilience.
Indices diverge as tech leads gains
At 14:37 ET, the benchmark S&P 500 was up 0.3% to 7,694.26 points, while the Nasdaq Composite climbed 0.8% to 27,015.39 points. The Dow Jones Industrial Average shed 0.4% to 51,144.85 points.
Interest-rate sensitive sectors such as communication services and technology made the biggest gains, even as Treasury yields rose amid a climb in oil prices. The 10-year yield hovered at its highest level since April 2002, while the 30-year yield sat at its highest since June 2002.
S&P 500 on track for a third straight positive September
Wednesday marked the final trading day of September, and the S&P 500 was on track for a 0.1% gain for the month, which would mark the third year in a row of a positive September. The index was also headed for a 2.6% advance for the quarter, a 10th positive quarterly performance in 12.
José Torres, senior economist at Interactive Brokers, said stocks weathered seasonal headwinds amid the surge in yields this month, with healthy economic data continuing to signal a buoyant corporate earnings outlook. Much of the strength has come from that earnings outlook and a rebound in the artificial intelligence trade.
Source: Investing.com
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