US Stocks Reach New Highs Amid Inflation Data Jitters
The US stock market has reached new highs following a strong rebound led by technology stocks. The S&P 500 rose 3.58%, the Dow Jones Industrial Average up 2.96%, and the Nasdaq Composite climbing 5.19%. This comes after July's nonfarm payrolls report showed an unexpected decline in US jobs, easing market concerns about a near-term Fed rate hike.
The latest employment data has heightened market focus on next week's release of July consumer price index (CPI) and producer price index (PPI) data. According to FactSet's consensus forecast, July CPI is expected to rise 3.4% year-over-year, slightly below June's 3.5%. The PPI report will further refine the market's assessment of inflation trends.
The shift in employment expectations has reduced market expectations for a Federal Reserve rate hike in September. U.S. money markets currently price in a roughly 44% probability of a Fed rate hike in September, which could decline further if inflation data come in weak.