Wall Street’s primary indices experienced gains on Thursday despite robust economic data, as investors clung to expectations of a Federal Reserve rate pause in September. Additionally, the market was focused on the much-anticipated debut of Arm Holdings’ shares on the Nasdaq.
Arm Holdings achieved a significant milestone with a $54.5 billion valuation in its IPO, with shares priced at $51 per American Depositary Share (ADS). This IPO marks the entry of a major player in the semiconductor industry into the public market, adding to the buzz around chip-related stocks.
Chipmakers like Nvidia, Micron Technology, and Broadcom posted gains ranging from 0.6% to 1.4%, reflecting the strong investor interest in AI chip stocks.
Despite hotter-than-expected economic data, including higher retail sales in August driven by increased gasoline prices, and an uptick in initial claims for unemployment benefits, investors seemed undeterred. Monthly producer prices for final demand also outpaced expectations, rising 0.7% last month.
However, data from Wednesday showed that core consumer prices, excluding volatile items like food and energy, experienced the smallest annual increase in nearly two years. Investors appeared to be overlooking the hotter-than-expected inflation numbers, focusing instead on potential rate hikes in the coming months.
The two-year US Treasury yield, which reflects short-term interest rate expectations, hovered near the 5% mark following the data release. It had come under pressure as the European Central Bank announced a 25-basis-point rate hike while signaling the end of its rate-hike cycle.
All 11 major S&P 500 sectors recorded gains, with the energy sector leading the way, up 1.2%. Rising oil prices contributed to concerns about sustained inflation, while the persistent growth in service prices kept the possibility of a November rate hike alive.
Traders are currently predicting a 97% chance that the Federal Reserve will maintain rates at its September 20 policy meeting, with a near 61% likelihood of a pause in November, according to the CME FedWatch Tool. Citigroup anticipates a 25-basis-point interest rate hike by the Fed in November, differing from its earlier forecast of a hike in September.
At 9:38 a.m. ET, the Dow Jones Industrial Average was up 155.88 points, the S&P 500 had gained 23.03 points, and the Nasdaq Composite was up 68.11 points.
Despite the overall positive sentiment, HP shares declined by 3.7% after Warren Buffett’s Berkshire Hathaway sold approximately 5.5 million shares of the company. Visa also saw a dip of 3.3% after announcing discussions with Class B shareholders regarding a proposal to convert their shares to Class C or Class A.
Advancing issues significantly outnumbered decliners on both the NYSE and Nasdaq exchanges, reflecting the overall bullish sentiment in the market.
