Traders on the floor of the New York Stock Exchange are closely monitoring stock futures as they hover near the flatline ahead of key inflation data set to be released. Futures associated with the Dow Jones Industrial Average have increased by 38 points, equating to less than 0.1%. Similarly, futures for the S&P 500 and Nasdaq 100 are also trending up by a marginal amount of less than 0.1%.
The investment community is anticipating the release of August’s personal consumption expenditures (PCE) price index on Friday. This report holds significant importance as it is the Federal Reserve’s preferred measure of inflation. Economists predict that the upcoming figures will indicate a rise in inflation, which could influence market perceptions. Currently, many in the market are factoring in two quarter-point interest rate cuts in the Fed’s forthcoming meetings, aligning with the central bank’s own forecasts.
However, recent economic data may lead to mixed reactions in the market. Solid job data released earlier this week, combined with a robust upward revision of second-quarter gross domestic product (GDP) to 3.8%, has somewhat softened bullish sentiment. Investors now hold concerns that a decline in jobless claims signals strength in the economy, potentially diminishing the Fed’s motivation to implement interest rate cuts.
On Thursday, all three major U.S. indexes experienced a downturn, with the 10-year Treasury yield climbing to 4.2% at one point during the session, driven by the latest economic figures. Shares of major companies in the artificial intelligence sector, including Oracle, Meta, and Tesla, have also retreated. Oracle, in particular, saw a decline of 5.6%, as some investors express apprehension that tech valuations may have escalated too much, raising questions about the sustainability of the AI sector.
For the week, the S&P 500 has slipped nearly 0.9%, while the tech-centric Nasdaq Composite has dropped about 1.1%. The Dow Jones Industrial Average has lost 0.8%, prompting certain market participants to express caution despite ongoing efforts to identify long-term buying opportunities. Andrew Slimmon, head of Applied Equity Advisors at Morgan Stanley Investment Management, noted that he views any downturn as an opportunity to bolster tech positions.
“The market was vulnerable to a pullback and because tech has been a leader, it’s the most vulnerable,” Slimmon explained, advising against panic amid current market movements. He emphasized that while these fluctuations may appear concerning, they can be healthy for the market, particularly in preventing rampant speculation.
