US stock market shows mixed reaction to economic data, interest rate expectations unchanged

Important economic data is partly helping the US stock market to reverse the trend. Interest rate expectations remain constant: investors expect the Fed to increase interest rates further.

A street sign on Wall Street in New York City. Photo: dpa

Dusseldorf. After the major indices on the US stock exchanges have only suffered losses so far this week, they are at least reacting mixedly to an important economic indicator on Wednesday.

The Dow Jones of standard stocks lost around 0.5 percent and stands at 51,060 points.

The broad S&P 500 remains unchanged at 7,683 points.

The Nasdaq technology exchange gains 0.8 percent to 27,020 points.

The Nasdaq 100, a reflection of the 100 non-financial companies with the highest market capitalization, rose by 0.7 percent to 30,553 points.

The density of appointments is high on Wednesday: The US Department of Commerce published the price index for personal consumption expenditures PCE. The September Private Sector Vacancies Report was also released.

Six Fed speakers will comment on this over the course of the rest of the week. The US government's labor market figures will follow on Friday, which also include job developments in the government sector.

Economic indicators give a mixed picture

The PCE remained at 3.4 percent in August, the same level as in the previous two months. Analysts were still expecting the index, which is the Federal Reserve's preferred measure of inflation, to rise.

The PCE measures how much households in the US actually spend on goods and services - and how these prices change. Unlike the Consumer Price Index (CPI), which is considered the official U.S. inflation rate, the PCE also takes into account expenses that are not directly paid by households, such as employer health insurance benefits.

The CPI also remained at 3.4 percent in August. The inflation rate had previously risen to 3.5 percent. It is therefore still well above the central bank's target of 2.0 percent.

US economy

Key US inflation measure remains at 3.4 percent

In order to counteract the high inflation, the Fed raised interest rates in September for the first time in three years to a range of 3.75 to 4.00 percent. The futures markets are very likely to expect another interest rate increase this year.

One reason for this is probably the ongoing conflict in the Middle East, which continues to keep oil prices at a high level. The North Sea Brent variety for delivery in November rose by a good one percent to just under $104 per barrel (159 liters), US light oil WTI for delivery in November rose by half a percent to around $90 per barrel.

The new figures nevertheless provide some relief on the bond markets. Yields on ten-year and two-year US bonds fell slightly after the publication. Yields had previously risen again: 30-year US government bonds were trading at up to 5.62 percent on Wednesday morning, their highest level since 2002, and ten-year bonds also approached this value.

High job creation in the private sector

US companies added more jobs in September than expected. A total of 90,000 jobs were added in the private sector, according to the company survey published on Wednesday by the personnel service provider ADP. Experts surveyed by the Reuters news agency had only expected an increase of 70,000 jobs, after a revised figure of 36,000 in August.

Surprisingly high job growth has the Fed remaining more restrictive out of concern about overheating the economy and reigniting inflation. The Fed has a dual mandate and strives for full employment in addition to stable prices.

The August personal consumption price index was better than expected. After a weak start to the week, there was a tailwind for Wall Street. However, Markus Koch warns that the stock market is doing worse than the indices indicate.

The US government's labor market report is due on Friday, which includes jobs in the private sector as well as job developments in the government sector. For the jobs report, economists expect a job increase of 90,000, after 162,000 jobs were added in August.

Look at individual values

Micron: The chip manufacturer Micron presents quarterly figures in the evening after the stock market closes. “The central question is how long the high growth can be maintained,” writes Jochen Stanzl, chief market analyst at Consorsbank. “Given its exposed position in the AI ​​supply chain, Micron’s numbers will also be a vote on what sentiment will look like across the AI ​​sector for the rest of the week.” In advance, the share is up with a slight gain of 0.4 percent.

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Moderna: The vaccine manufacturer's shares are down around five percent. Citigroup analyst Geoff Meacham recently downgraded the stock from a neutral rating to a “sell” rating, saying the price suggested the cancer vaccine would be successful far beyond skin cancer. However, this is not proven and even in the best case scenario the share would only be worth half as much. Over the year, the share is up around 640 percent.

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