Investors in Orlando and across the nation saw the dollar and U.S. Treasury yields inch up on Wednesday after the latest Personal Consumption Expenditures (PCE) report showed inflation running hotter than forecast. The market’s reaction was muted, with major indices ending near flat as traders focused on upcoming events.
Key market moves
Stocks: Asian markets led gains, with South Korea up 1% and Japan and China each rising about 0.5%. European exchanges, the United Kingdom and U.S. equities closed essentially unchanged.
Sectors: Seven S&P 500 sectors fell while four rose. Healthcare slipped 1%, while industrials added 1%. Notable movers included Moderna down 5%, Eli Lilly down 4%, and Honeywell up 2.3%.
Currency: The dollar rose 0.3%, its biggest gain in two weeks. The Swedish krona fell 1%, the steepest decline in two months, and the Colombian peso headed toward its worst week since April.
Bonds: U.S. yields rose 1–3 basis points, and the 2‑year/30‑year curve flattened to its narrowest spread since the July Fed meeting. The latest five‑year Treasury auction posted a bid‑to‑cover ratio of 2.37, the highest this year.
Commodities: Copper futures hit a record $6.75 per pound, while Brent crude slipped 1% and gold fell 1%. U.S. natural gas rose 3% to a one‑month high.
Inflation and Fed outlook
The PCE index, the Federal Reserve’s preferred gauge, rose 0.2% month‑on‑month in July, above the 0.1% forecast, and the annual rate edged up to 3.7%. Core PCE increased 0.246%, close to 0.3%. Traders continue to price a 60‑40 chance of a rate hike next month, reflecting lingering concerns that inflation remains sticky.
Treasury Secretary Scott Bessent’s recent comments about lowering long‑term yields appear to be influencing bond market expectations, but the data underscore the Fed’s need for vigilance. All eyes now turn to Fed Chair Kevin Warsh’s keynote at the Jackson Hole symposium on Friday for clues on future policy.
Corporate earnings and consumer trends
National accounts released Wednesday showed corporate profits as a share of GDP reached a new record, with after‑tax income hitting 12.1% of GDP. Meanwhile, personal savings fell to 3.0% in Q2, still well below historic norms, suggesting households may rely more on credit as spending stays robust.
In the tech sector, Nvidia reported Q2 results that beat estimates and offered an upbeat Q3 revenue outlook, though it excluded data‑center chip sales to China. Despite the strong numbers, the stock slipped up to 3% in after‑hours trading as analysts anticipate a modest dip in gross margins from 75% to 74% in the next quarter.
What’s next?
Market participants will watch several upcoming events, including South Korea’s interest‑rate decision, a $44 billion U.S. Treasury auction of 7‑year notes, the release of July trade data, weekly jobless claims, and earnings from companies such as Marvell Technology, Workday and Dollar General.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
