Stocks rally with Dow surging by 617 points, approaching rate reductions: Today's Stock Market Report
Market Highlights: August 31, 2022
In today's market roundup, technology stocks soared, and the major indices reached new record highs, while inflation continued to rise and unemployment claims saw an uptick.
Citi's bullish outlook on Micron Technology (MU) sent shares surging by 7.6%. The investment bank believes that increased demand for Micron's dynamic random-access memory (DRAM) chips, particularly from the data center end market, leaves room for further growth. Citi expects Micron to provide strong guidance when it appears on the earnings calendar later this month.
The Dow Jones Industrial Average finished up 1.4% at 46,108, the S&P 500 added 0.9% to 6,587, and the Nasdaq Composite gained 0.7% to 22,043, all ending at new record closing highs.
Meanwhile, the Consumer Price Index (CPI) rose by 0.4% month over month in August, higher than the 0.2% rise seen in July. Core CPI, which excludes volatile food and energy prices, was up 0.3% month over month and 3.1% year over year. This marks a quicker pace than the month prior and the largest annual increase since January.
The Labor Department reported a rise in weekly jobless claims, with the number climbing by 27,000 last week to a seasonally adjusted 263,000, the highest level since October 2021. Bill Adams, chief economist at Comerica Bank, noted that the job market is looking the wobbliest since the pandemic. However, the name of the economic expert who sees poor unemployment data as a key cause for further money market tension at the Bundesbank is not provided in the available information.
Simon Dangoor, head of Fixed Income Macro strategies at Goldman Sachs Asset Management, expects the Fed to cut rates next week due to weak labor market data. CME FedWatch shows that futures traders are pricing in a 95% chance the Federal Reserve will lower the federal funds rate by 25 basis points (0.25%) when it concludes its meeting next Wednesday afternoon. Dangoor also expects the Fed to follow up with further easing in October.
In other news, Amazon.com (AMZN) was added to Morgan Stanley's "top pick" list, with analyst Brian Nowak seeing potential for faster growth from Amazon's push into the $600 billion fresh grocery market. Nowak believes Amazon is preparing to more than double its reach to 2,300 cities by year's end by retrofitting existing fulfillment centers and adding new ones with cold storage capabilities. Each 1% of market share Amazon captures in the fresh grocery market will boost Nowak's fiscal 2026 gross merchandise volume forecast by roughly 120 basis points.
As always, stay tuned for the latest market updates.
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