The Dow Jones Industrial Average surged by an impressive 329 points, translating to approximately 1% growth. In tandem, the S&P 500 charted an 0.8% uptick, mirroring the Nasdaq Composite’s 0.8% ascent.
Notably, Arm, the chip design firm, witnessed its stock soar by an astounding 15% on the day it entered the trading fray. Priced at a per-share value of $51 during its initial public offering on Wednesday, Arm’s debut in the market ignited optimism among investors. This event is poised to be the year’s most significant tech offering, potentially reinvigorating a somewhat dormant IPO landscape.
Jim Lebenthal of Cerity Partners expressed his positive sentiments, stating, “I appreciate its current market position. Any potential decline should not reflect negatively on the company’s performance, which we unanimously agree is outstanding. Rather, it may be attributed to concerns over valuation, potentially affecting other market segments, such as Nvidia, where valuations remain uncertain,” added Lebenthal.
In parallel, investors absorbed an array of economic reports, revealing indicators of tempered core inflation and a resilient consumer base. August’s producer price index revealed that core PPI, excluding food and energy, experienced a modest 0.2% increase, aligning with economists’ forecasts cited by Dow Jones. However, the headline figure saw a more substantial 0.7% rise, surpassing the expected 0.4% uptick.
This development followed Wednesday’s release of August’s consumer price index, which slightly exceeded projections for core CPI, excluding food and energy, on a monthly basis.
In yet another encouraging sign, August’s retail sales surpassed expectations, registering a 0.6% surge against economists’ forecasts of a mere 0.1% increase. Even when excluding automobile sales, retail figures still outperformed expectations, posting a 0.6% rise compared to the projected 0.4% increase.
Mike Loewengart from Morgan Stanley Global Investment Office offered his perspective, stating, “Similar to last week, the data continues to paint a picture of a robust U.S. economy. However, the perennial concern remains: this robustness can potentially translate into persistent inflation, as evident from the hotter-than-anticipated PPI figures.”
While the Federal Reserve is expected to maintain its current course during the September policy meeting, the European Central Bank (ECB) took action by increasing rates by the anticipated quarter percentage point on Thursday. Nevertheless, the ECB acknowledged the easing of inflation and hinted at the possibility of nearing the conclusion of its rate-hiking campaign.
In the United States, Fed funds futures pricing data indicates a 97% probability of unchanged rates in the upcoming week, as per the CME FedWatch Tool.
Nonetheless, even if the central bank opts for rate stability this time, market volatility is likely to persist in the months ahead. Fed funds futures pricing data currently assigns a roughly 40% likelihood of rate hikes during the November meeting.
On a separate note, Adobe is slated to unveil its quarterly results following the market’s closure on Thursday.