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Dow Jones Gains as Fed’s Favorite Inflation Gauge Cools

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Dow Jones Gains as Fed’s Favorite Inflation Gauge Cools

Stocks moved mixed Friday as investors welcomed an inflation report seen as crucial to the Federal Reserve’s next interest rate cut decision.

The S&P 500 (^GSPC) settled just above the flat line after posting a third record close this week. The Dow Jones Industrial Average (^DJI) gained 0.9%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.3%.

August’s reading of the Personal Consumption Expenditures (PCE) index, the Fed’s preferred measure of inflation, showed a continued slowdown in price pressures. The “core” PCE index, which is most closely watched by policymakers, rose 0.1% month over month, lower than Wall Street forecasts.

The PCE figure appears to increase bets on another giant rate cut from the Fed next month. More than half of traders – around 52% – now expect a 50 basis point cut.

Learn more: What the Fed Rate Cut Means for Bank Accounts, CDs, Loans and Credit Cards

Stock indicators are on track for weekly gains after market confidence in the economy returned. A strong GDP reading, combined with a continued slowdown in inflation, has reinforced the growing belief that the Fed can achieve a “soft landing” as it embarks on a rate-cutting campaign.

Elsewhere, China added to its flood of stimulus measures, boosting markets once again. Mainland stocks recorded their biggest weekly win since 2008, and luxury stocks are set for their best week in years as hopes for Chinese demand rise. Meanwhile, shares of Alibaba (BABA, 9988.HK), JD.com (JD, 9618.HK) and Meituan (3690.HK, MPNGY) surged amid the buying frenzy.

Among other individual stock moves, Costco (COST) stock fell in afternoon trading after the wholesale giant’s earnings disappointed Wall Street.

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Friday, September 27, 2024 at 8:58 a.m. PDT

Stock Trends Friday

Here are some of the stocks topping Yahoo Finance’s trend tickers page during morning trading on Friday:

Costco (COST): Shares of the warehouse retailer fell more than 1% Friday morning after the company released a mixed fourth-quarter earnings report. Revenue came in at $79.70 billion, slightly below the $79.96 billion expected. At the same time, comparable sales in the United States, excluding gasoline and currency effects, were better than analysts expected.

Cassava Sciences (SAVA): Shares of the biopharmaceutical company fell more than 10% after it reached a settlement with the U.S. Securities and Exchange Commission over allegations that it made misleading claims about an Alzheimer’s disease clinical trial. Alzheimer’s. The settlement amounts to more than $40 million

Bristol Myers Squibb (BMY): The pharmaceutical company rose 3% following news of FDA approval of its schizophrenia drug, making it the first new drug approach for patients with the illness in 30 years.

Acadia (ACHC): Shares of the behavioral health facility chain fell about 18% Friday after it reached an agreement with the U.S. Department of Justice to resolve allegations that it knowingly billed patients for inpatient behavioral health services medically useless. They agreed to pay nearly $20 million.
Friday, September 27, 2024 at 8:11 a.m. PDT

Market Bets Rise for Another Massive Rate Cut

The latest encouraging reading from the Fed’s preferred inflation gauge has changed market expectations about the likelihood of another 50 basis point interest rate cut.

On Friday, the personal consumption expenditures (PCE) index showed that prices in August rose at a slower pace than expected on a monthly basis. This has impacted the debate over the Fed’s next policy rate decision, as central bankers make progress in reducing their tightening cycle.

After Friday’s inflation release, investors were pricing in a 54% chance of seeing a 50 basis point rate cut at the Fed’s November policy meeting. That compares to the 50% chance seen a week ago, according to the CME FedWatch tool.

If inflation continues to show signs of slowing, that will likely push Fed officials to accelerate their plans to cut interest rates, as high rates threaten the labor market and could lead to an economic slowdown that officials have so far avoided.
Friday, September 27, 2024 at 7:17 a.m. PDT

Costco Stocks Fall, But Its Gold Bars Are Selling Like Hotcakes

Costco (COST) is releasing a lot of gold bars as prices of the precious metal continue to climb, Yahoo Finance’s Brooke DiPalma and Brian Sozzi report.

Gold sales grew “by double digits” in the most recent quarter, the wholesale giant’s CFO Gary Millerchip told analysts on a conference call Thursday evening. Millerchip added that gold was a “significant tailwind” for e-commerce sales in the quarter.

Costco began selling gold bars in fall 2023. Wells Fargo analysts have estimated that the company moves $100 million to $200 million worth of bars each month.

On its website, Costco sells its 1-ounce gold bar for $2,679.99. You must be a member to purchase bars. It is also non-refundable and there is a limit of five total units per membership.

Despite gold’s massive sales, Costco’s Bread and Butter still sells products like bread and butter to cost-conscious shoppers.

In the fiscal fourth quarter, same-store sales growth was 6.9%, compared to a Wall Street estimate of 6.4%. E-commerce sales jumped 19.5%, slightly lower than the 19.63% growth rate expected by analysts.

Read more here
Friday, September 27, 2024 at 6:33 a.m. PDT

Stocks Open Higher as Inflation Measure Shows Further Cooling

Stocks continued to gain positive momentum Friday morning as investors welcomed another update showing easing price pressures. The encouraging inflation report boosted market expectations that the Federal Reserve could make another massive rate cut at its next policy meeting in November.

The S&P 500 (^GSPC) rose 0.1% after posting a third record close this week. The tech-heavy Dow Jones Industrial Average (^DJI) and Nasdaq Composite (^IXIC) each gained about 0.2%.
Friday, September 27, 2024 at 6:30 a.m. PDT

Intel Stock Advances on News of CHIPS Act Funding Negotiations, Arm Offer Reports

Intel (INTC) stock rose 1.8% in early trading Friday after the Financial Times reported that the chipmaker and the U.S. government were close to finalizing $8.5 billion in financing under of the CHIPS Act for Business by the end of the year.

Separately, Bloomberg reported that Arm Holdings (ARM) has expressed interest in purchasing Intel’s products business.

A potential offer from Arm, the British chip designer with high-profile partners including Google (GOOG) and Apple (APPL), was rejected by Intel, unnamed sources told Bloomberg.

Intel has also reportedly been approached by Qualcomm (QCOM) and investment manager Apollo to buy the company in its entirety. Intel shares soared following the news last week, but remain down more than 50% from the start of the year. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

Rival Qualcomm has launched a friendly takeover offer, according to the Wall Street Journal, but such a deal could face backlash from antitrust regulators. Analysts have also expressed doubts about the financial relevance of a takeover by Qualcomm or Intel.
Friday, September 27, 2024 at 5:44 a.m. PDT

The Fed’s preferred inflation gauge shows prices rose less than Wall Street expected in August

The latest reading from the Fed’s preferred inflation gauge showed prices rose at a slower pace than expected on a monthly basis in August.

The “core” personal consumption expenditure (PCE) index, which does not take into account the cost of food and energy, increased 0.1% from the previous month in August. This figure, closely monitored by the Federal Reserve, was lower than the 0.2% expected by Wall Street and the 0.2% observed in July.

Compared to a year earlier, prices rose 2.7% in August, matching Wall Street expectations and surpassing the 2.6% rate seen in July.

Learn more here.