NEW YORK (`) – Shares presented a mixed picture in Thursday afternoon Wall Street trading and were on track to end a mostly miserable August.
The S&P 500 gave up early gains, falling 0.1%. The benchmark index is on track for its first monthly loss since February, although gains earlier this week helped mitigate the severity of the decline.
The Dow Jones Industrial Average fell 63 points, or 0.2%, to 34,821 as of 12:51 p.m. Eastern Time. The Nasdaq rose 0.1%.
Technology and communications stocks saw some of the biggest gains. Software company Salesforce rose 3.3% after raising its earnings forecast for the year. Cloud-based security firm CrowdStrike rose 8.8% after reporting strong financial results.
Dollar General was among several retailers that slipped after reporting weak earnings and guidance. The company plunged 12.9% after lowering its earnings guidance for the year.
The government reported that a The inflation indicator closely followed by the Federal Reserve remained low in July. The latest update to the PCE report on personal consumption and spending data is the latest sign that price increases are moderating. Investors are hoping that the Fed could be done raising rates soon.
The central bank has aggressively raised interest rates since 2022, to their highest level since 2001. The aim was to bring inflation back to the Fed’s 2% target. The PCE came in at 3.3% in July, in line with economists’ expectations. That’s down from 7% a year ago.
The latest inflation data follows updates on jobs and consumer confidence This week, it also supports hopes that the Fed will suspend rate hikes. The central bank left interest rates unchanged at its last meeting and is expected to do so in September. According to CME’s FedWatch tool, investors expect interest rates to remain stable for the remainder of 2023.
The Fed has insisted it is ready to raise rates further if necessary, but will base its next steps on the latest economic data.
“The last raise they made could potentially be their last this year,” said Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance. “As long as inflation remains controlled and contained, I think the Fed is done raising rates.”
Bond yields fell slightly. The yield on the 10-year government bond fell to 4.08% from 4.11% late Wednesday. The two-year Treasury yield, reflecting expectations from the Fed, fell slightly to 4.86% from 4.88% late Wednesday.
Wall Street is waiting for another big economic update this week. On Friday, the government will release August employment data. The strong job market and consumer spending have so far helped avert a recession that analysts had been expecting sometime in 2023. But they also complicated the Fed’s task of containing inflation by boosting wage and price increases.
The Fed hopes it can lower interest rates without plunging the economy into recession. The likelihood of a recession, or at least a severe one, appears to have receded despite the recent plunge in August, which in turn is boosting market confidence in 2023.
“Sooner or later there has to be a withdrawal,” Zaccarelli said. “The market can’t always go up in a straight line.”
The markets in Europe mostly fell. Annual inflation there remained stable in August As food prices soared on a backdrop of falling fuel costs, it was unclear whether the European Central Bank will halt its record-breaking string of rate hikes.
Asian markets were mixed.
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Joe McDonald and Matt Ott contributed to this report.
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