[New York Stock Market Morning Briefing] S&P500 Hits Record High for Second Straight Day

S&P500 Hits Record High for Second Straight Day on Favorable Inflation Data

Dow Falls on Weak Apple… Nasdaq Hits Record High

PPI Unexpectedly Falls… Fed September Rate Cut Expectations Rise

In the U.S. New York market on the 10th (local time), the S&P500 index hit a record high for the second straight day. The Producer Price Index (PPI) unexpectedly fell, boosting expectations of a rate cut by the U.S. central bank (Fed).

The S&P500 closed up 0.3% at 6,532.04, marking another record high. Intraday, it rose as much as 0.7% to 6,555.97, setting an intraday record high. The Nasdaq Composite closed slightly up 0.03% at 21,886.06, also marking an all-time closing high; it reached an intraday high before trimming gains in the afternoon. By contrast, the Dow Jones index finished at 45,490.92, down 220.42 points (0.48%). This was largely due to Apple shares falling on investor disappointment over the new iPhone announcement.

By the close most gains had been given back, but Oracle and artificial intelligence (AI)-related stocks showed the largest advances. Within the S&P500, there were more decliners than advancers.

Investor sentiment improved sharply early in the session as the Producer Price Index (PPI) unexpectedly fell. August PPI dropped 0.1%, the opposite of the Dow Jones–compiled economists' forecast of a 0.3% rise. Core PPI, which excludes volatile food and energy, also fell 0.1%, while the market had expected a 0.3% rise. Ahead of the Consumer Price Index (CPI) to be released on the 11th, this was interpreted as a positive signal that inflation in the U.S. economy is easing.

Economists expect CPI to rise 0.3% month-on-month. This refers not only to the headline index but also includes the core index that excludes volatile food and energy. If the forecast holds, the annual CPI increase would rise to 2.9%, while core CPI is expected to remain unchanged at 3.1%.

If these figures come in as expected, the Fed would have room to cut rates again at its September meeting, Sam Stovall of CFRA Research said. According to the Chicago Mercantile Exchange (CME) FedWatch tool, traders currently are confident the Fed will enact at least a 0.25%-point rate cut. After the PPI release, expectations also grew that the central bank could enact a larger 0.5%-point, or 50bp, rate cut.

Stovall told CNBC, "With the PPI coming in lower than expected and employment data coming in much weaker than expected, the Fed has a reason to cut 50bp," adding, "It may be a move to avoid falling behind or even to get ahead in terms of the Fed’s response speed, similar to the president saying Chair Powell is too slow." He added, "Such a decision could fuel the market from now through the end of the year."

Oracle stock stood out on the day. The shares surged 36%, recording its best day since 1992. Oracle said that in the recent quarter, multi-cloud database revenue from collaborations with Amazon, Google, and Microsoft rose a staggering 1529% year-on-year, thanks to a surge in AI server demand. Nvidia shares rose 3.9% on the day, and AMD also showed gains.

New York=Park Shin-young, correspondent nyusos@hankyung.com