Dow Holds Firm as Stagflation Fears Rise with Revised GDP Figures
The Dow Jones Industrial Average (DJIA) closed around 53,500 on Monday, after a data release that was initially considered uneventful. The July core Personal Consumption Expenditures (PCE) prices rose 0.2% for the month and 3.3% year-over-year, matching market expectations.
However, a revision to second-quarter Gross Domestic Product (GDP) figures showed price measures increasing across the board. The GDP price index rose to 6.4%, while quarterly headline PCE prices reached 5.3%. These numbers surpassed consensus estimates, with some experts calling it 'stagflationary'.
On the household side of the release, personal income rose 0.4% in July, but nominal spending grew by precisely the amount prices did. This means that households banked the difference rather than consuming it, which could be a sign of unease about future economic conditions.
The DJIA's performance was not directly affected by this data release, as market attention is focused on upcoming events such as Nvidia's earnings report and Fed Chair Warsh's keynote at the Jackson Hole symposium. The 30-year rate has been steadily increasing, with the current rate sitting near its highest level in nearly two decades.