Nasdaq 100 and S&P500: Rate-Cut Hopes Lift Tech Stocks and US Indices

Wall Street Rises as Key Inflation Data Boosts Rate-Cut Hopes

Wall Street’s major indexes climbed on Friday, closing the month with gains driven by a key inflation report that signaled moderating price pressures. This development has bolstered expectations for an interest rate cut at the U.S. Federal Reserve’s upcoming September meeting.

At 15:04 GMT, the Dow Jones Industrial Average is at 41363.32, up 28.27 or +0.07%. The S&P 500 Index is trading 5613.52, up 21.56 or +0.39% and the Nasdaq-100 Index is at 17602.33, up 85.90 or +0.49%.

PCE Index Shows Slowing Inflation

The Personal Consumption Expenditure (PCE) index, the Federal Reserve’s preferred measure of inflation, increased by 2.5% year-over-year in July, slightly below economists’ expectations of 2.6%. On a monthly basis, the index rose 0.2%, aligning with forecasts. This data is the last major inflation indicator before the Fed’s September meeting and follows Fed Chair Jerome Powell’s recent comments suggesting that the central bank is nearing its inflation target.

Sector Performance and Notable Movements

The S&P 500 saw ten of its eleven sectors advance, with technology stocks leading the charge, rising by 1%. The tech-heavy Nasdaq and the S&P 500 both closed lower on Thursday after Nvidia’s results fell short of lofty investor expectations, despite a subsequent 1.7% rebound in Nvidia’s stock on Friday.

Rate-sensitive technology giants, including Amazon.com and Microsoft, saw their shares rise by 1.3% and 0.7%, respectively. Chip stocks also performed well, with Broadcom gaining 3.4% and Advanced Micro Devices adding 1.4%. These gains helped propel the Philadelphia Semiconductor Index up by 2.2%.

Marvell Technology was another standout, jumping 6.3% after projecting better-than-expected third-quarter results. In contrast, Ulta Beauty dropped 4.4% after lowering its annual forecast. Intel surged 5.9% on reports that it might pursue a merger or split, while Dell Technologies gained 2.5% after raising its annual revenue and profit forecasts.

Market Sentiment and Upcoming Economic Data

Investors are now closely watching the upcoming jobs report, scheduled for release next Friday, which could significantly influence the Fed’s decision-making process. As it stands, the CME Group’s FedWatch Tool indicates a 69.5% probability of a 25-basis-point rate reduction, while the likelihood of a more substantial 50-basis-point cut stands at 30.5%.

Despite concerns earlier this month about a potential economic slowdown—prompted by signs of a cooling labor market—market sentiment has improved. The Dow Jones Industrial Average is nearing record highs, supported by positive economic data, including Thursday’s upward revision of economic growth figures.

Market Forecast

As the Labor Day weekend approaches, trading volumes are expected to thin, potentially leading to increased volatility. However, with the S&P 500 close to an all-time high and poised for a monthly gain of 1.8%, and the Nasdaq up 0.3% in August, the market outlook remains cautiously optimistic. Investors will closely monitor next week’s jobs report, which could further solidify expectations for a rate cut or prompt a reevaluation of market positioning.