Costs are proven in a store dwelling window in Brooklyn on August 14, 2024 in New York Metropolis Metropolis.Â
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What you require to know immediately
Rebound rally
Major U.S. indexes closed higher in a choppy session on Wednesday, lifted by technology stocks. Asia-Pacific markets were trading higher on Thursday. Japan’s Nikkei 225 jumped 3.43% and the Taiwan Weighted Index rose 3%. Chip-related Asian stocks including Tokyo Electron, Advantest and TSMC rose, tracking the rally in U.S. technology stocks.
UBS CEO sees soft landing
Sergio Ermotti, Group CEO of UBS Group AG, told CNBC that investors expecting the Fed to cut rates aggressively are getting “ahead of the curve.” Sticky inflation remains the “most important” issue, he added â August’s core CPI surprised to the upside. However, Ermotti still sees “the outlook [as] pretty consistent with a soft landing.”
Harris or Trump? Little difference for China
Regardless of who wins the U.S. Presidential elections, the country’s trade ties with China will remain tense, said Carlos Casanova, senior economist at Swiss private bank UBP. Donald Trump has proposed tariffs of up to 100%, while Kamala Harris is expected to stick with Joe Biden’s tariff policy that not only retained Trump-era tariffs but also escalated them.
[PRO] Opportunities for semiconductor stocks
Semiconductor stocks have been the market’s darling this year and are responsible for pushing the S&P 500 to consecutive fresh highs. However, since July, they’ve had wild swings. Still, with some chip stocks being undervalued, they appear to be good buys amid this volatility, said analysts.
The bottom line
On the surface, Wednesday looked like a great day for investors.
The S&P 500 climbed 1.07%, the Dow Jones Industrial Average added 0.31% and the Nasdaq Composite shot up 2.17%.
However, those numbers are hiding turmoil under their pretty facades.
The S&P dropped around 1% during trading but eventually managed to claw back losses and close more than 1% higher by the end of the day. It’s the first time the broad-based index has done so since October 2022.
The consumer price index for August precipitated the initial fall. Core inflation, to which the Fed pays more attention because it more accurately reflects price movements, came in a bit higher than expected for the month.
Core inflation was higher than the headline number because food and energy prices are stripped out from the former. And both were mild for the month: Food prices were only 0.1% higher, suggesting no pets need to be eaten, while energy costs fell 0.8%.
Still, that data means the Fed’s unlikely to make a jumbo-sized 50-basis-point cut. Disappointment translated into stocks dropping.
Even with inflation remaining difficult to tame, it doesn’t mean consumers are worse off. Real earnings rose 0.2% for the month, showed a separate Bureau of Labor Statistics report, which means the rise in income outstripped price increases.
That might have helped the intraday rebound in the S&P.
As for the Nasdaq, it was buoyed by technology stocks, which experienced a huge bounce from the previous days’ falls. Nvidia popped 8%, probably on news the U.S. might let the chipmaker sell advanced chips to Saudi Arabia, according to Reuters.
Nonetheless there could also be way more choppiness upfront in markets. The united state federal authorities is, as soon as extra, close to to a closure on account of politicking over federal authorities financing. It is just about just like the united state Legislature has no thought of a method. Â
â $ “CNBC’s Jeff Cox, Pia Singh and Lisa Kailai Han added to this story.
