Wall Street Is On Hold In Run-Up To Inflation Data: Markets Wrap

Wall Street trading was fairly quiet, with stocks holding near all-time highs as data showed economic resilience before a key inflation report. Bonds were mixed. The dollar fell.

Just 24 hours ahead of the release of the Federal Reserve’s favored inflation gauge, data showed the US economy expanded in the second quarter at a slightly faster pace than initially estimated on a pickup in business investment and an outsize boost from trade.

The S&P 500 was little changed, with Nvidia Corp. falling on an uninspiring forecast. Short-dated Treasuries underperformed. The 10-year yield was little changed.

“The economy appears to be on all cylinders, and it should be a boost of confidence to markets that most of the tariff-angst was misplaced earlier this year,” said Chris Zaccarelli at Northlight Asset Management. “However, markets have already priced in a September rate cut and it is important that the inflation data remains restrained between now and then.”

A key US inflation gauge probably ticked higher, with a report Friday forecast to show the personal consumption expenditures price index excluding food and energy rose 2.9% in July from a year ago. That would be fastest annual pace in five months.

Investors continue to monitor comments from Fed officials to gauge their appetite for a September rate cut, with Governor Christopher Waller due to speak later Thursday.

Meantime, Fed Governor Lisa Cook filed a lawsuit challenging President Donald Trump’s attempt to fire her over claims she lied on mortgage applications, kicking off a historic fight over independence of the US central bank.

Inflation-adjusted gross domestic product, which measures the value of goods and services produced in the US, increased at a 3.3% annualized pace. That compared with an initially reported 3% increase.

To Bret Kenwell at eToro, the GDP data helped ease concerns that the US economy is teetering toward a recession. 

“While the result may not necessarily wow investors, it shows a steady and resilient consumer — a rhetoric that’s being reflected in retail sales reports and corporate earnings calls,” he said.

Looking ahead, Kenwell says that in-line or lower PCE results will likely cement investors’ confidence in a September rate cut. While a higher-than-expected print may not take a rate cut off the table next month, it could sour Wall Street’s mood as inflation concerns grow. 

Separate data Thursday showed US initial jobless claims edged down last week, suggesting employers are holding onto current workers amid economic uncertainty.

• CrowdStrike Holdings Inc. reported strong results, but narrowly missed analysts’ estimates for sales in the current quarter, suggesting that the cybersecurity company remains in recovery mode after triggering a global computer outage last year.

• HP Inc. gave a profit outlook for the current quarter that was in line with expectations, but investors remain concerned about the impact of economic uncertainty and higher costs tied to President Donald Trump’s trade policies.

• Snowflake Inc. gave a strong outlook that overcame anxiety that software vendors will be hurt as the economy slows and new artificial intelligence companies take away business.

• Best Buy Co. warned that tariffs continue to weigh on its business ahead of the crucial holiday shopping season, taking the shine off a quarter in which the electronics retailer boosted sales for the first time in more than three years.

• Bath & Body Works Inc.’s profit missed expectations for the first time since 2020, underscoring the turnaround challenge for its new chief executive officer.

• Victoria’s Secret & Co. raised its outlook after strong quarterly sales signaled new Chief Executive Officer Hillary Super’s turnaround plan is taking hold.

• Dollar General Corp. reported stronger-than-expected sales and raised its forecast, adding to signals that US shoppers are still willing to spend on items they see as good value.

• Dick’s Sporting Goods Inc. raised its full-year outlook, a welcome sign of strong consumer demand as the retailer prepares to acquire sneaker chain Foot Locker Inc.

• Toronto-Dominion Bank and Canadian Imperial Bank of Commerce topped estimates as both banks reported strong performance in their domestic-banking units and lower-than-expected loan-loss provisions.

Stocks

• The S&P 500 was little changed as of 9:47 a.m. New York time

• The Nasdaq 100 rose 0.2%

• The Dow Jones Industrial Average fell 0.2%

• The Stoxx Europe 600 fell 0.2%

• The MSCI World Index rose 0.2%

• Bloomberg Magnificent 7 Total Return Index was little changed

• The Russell 2000 Index rose 0.1%

• Nvidia fell 0.8%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.2% to $1.1663

• The British pound was little changed at $1.3494

• The Japanese yen rose 0.2% to 147.17 per dollar

Cryptocurrencies

• Bitcoin rose 0.4% to $112,830.84

• Ether fell 0.4% to $4,578.22

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.24%

• Germany’s 10-year yield was little changed at 2.71%

• Britain’s 10-year yield declined two basis points to 4.72%

• The yield on 2-year Treasuries advanced four basis points to 3.65%

• The yield on 30-year Treasuries declined one basis point to 4.91%

Commodities

• West Texas Intermediate crude fell 0.5% to $63.85 a barrel

• Spot gold rose 0.3% to $3,406.41 an ounce