Wall Street Is Steady Following Economic Reports With Few Surprises.
U.S. stocks are holding relatively steady Thursday following a couple of reports on the economy that came in close to expectations.
The S&P 500 was virtually unchanged in early trading and remains on track for a fourth winning week in the last five. It’s climbed back within 2% of its record set in July following a shaky summer.
The Dow Jones Industrial Average was up 47 points, or 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.1% higher.
Treasury yields were also relatively steady in the bond market following reports on layoffs and inflation that included few surprises. The data did little to change the overriding belief in the market that the U.S. economy is slowing, along with inflation, and that the Federal Reserve will deliver a cut to interest rates next week in hopes of protecting the job market and preventing a recession.
One report said the number of U.S. workers applying for unemployment benefits last week ticked up a bit, though it remains low relative to history. Another said prices charged at the wholesale level were 1.7% higher in August than a year before. That’s a slowdown from July’s inflation rate, but an underlying measure of inflation that economists see as a better predictor of future trends also ticked up more than expected.
The inflation data was similar to Wednesday’s report on prices at the U.S. consumer level. It kept traders betting the Fed would deliver a traditional-sized cut of a quarter of a percentage point next week, instead of the larger half-point that some had earlier been expecting.
While lower interest rates help goose the economy and investment prices, they can also give inflation more fuel.
In the bond market, the yield on the 10-year Treasury rose to 3.68% from 3.66% late Wednesday. The two-year Treasury yield, which more closely tracks expectations for Fed movement, was a bit steadier. It rose to 3.66% from 3.65%.
Any cut to rates by the Fed would be the first in more than four years, as it’s been more focused in recent years on fighting inflation. Across the Atlantic, moves to protect the economy have already begun. The European Central Bank cut interest rates by a quarter of a percentage point on Thursday, the second time it’s done so to prop up economic growth.