Wall St indexes rise as PPI data keeps smaller rate cut in view

By Sinéad Carew and Shashwat Chauhan

(Reuters) - Wall Street's main indexes rose on Thursday after higher-than-expected producer prices data reinforced expectations for a 25-basis point rate cut by the Federal Reserve, while Moderna (NASDAQ:MRNA ) slumped following a downbeat revenue forecast.

The producer price index (PPI) for final demand rose 0.2% in August, compared with estimates for 0.1% growth. The core number, which strips out volatile food and energy prices, rose 0.3%, higher than the 0.2% forecast.

Separately, initial claims for state unemployment benefits stood at 230,000 for the week ended Sept. 7, in line with estimates.

"You continue to get data indicating that inflation is cooling with the producer prices numbers. Also what we've seen in the last couple of days is a willingness of investors to come in on declines," said Chuck Carlson, CEO of Horizon Investment Services in Hammond, Indiana. "Investors remember those significant reversals so today there's less inclination to go against the buying momentum."

A string of weakening employment and economic growth data over the past few weeks had fueled some bets on a larger-than-usual 50-bps interest rate cut by the Fed.

Those expectations faded after Wednesday's inflation report to a 75% chance the U.S. central bank cuts rates by just 25 bps when it meets on Sept. 17-18, CME's FedWatch Tool showed. It would be the first rate cut since March 2020.

As of 2:11 p.m. ET the Dow Jones Industrial Average rose 162.35 points, or 0.40%, to 41,024.06, the S&P 500 gained 39.05 points, or 0.70%, at 5,593.18 and the Nasdaq Composite climbed 180.07 points, or 1.04%, to 17,575.60.

Most of the S&P 500 sectors were higher, led by communication services, which rose 1.8%. The weakest sector was real estate, down 0.04%.

The more economically sensitive small-cap Russell 2000 meanwhile outperformed, rallying 1.4%.

"There's probably some bargain hunting. Small caps is an area that's lagged all year and they'll tend to be rate sensitive so if rates are coming down that might have a decent impact," said Carlson.

Meanwhile, Moderna's stock was down 11.5% after hitting its lowest intraday level since November. It was the biggest decliner on the S&P 500 after the vaccine maker forecast sales of $2.5 billion to $3.5 billion next year, below analysts' estimates.

Micron Technology (NASDAQ:MU ) dropped 3% after a report that Exane BNP Paribas (OTC:BNPQY ) downgraded the chipmaker's shares to "underperform" from "outperform."

Kroger (NYSE:KR ) gained 6% after the supermarket chain beat second-quarter estimates and raised the lower end of its annual sales forecast.

Shares of gold miners jumped as spot gold hit a record high, with the Arca Gold BUGS index up 6.3%.

Shares in Warner Bros Discovery (NASDAQ:WBD ) rose 8.9% on news that Charter Communications (NASDAQ:CHTR ) would provide an ad-supported version of Warner's streaming services Max and Discovery+. Charter's shares rose 3%.

Advancing issues outnumbered decliners by a 3.39-to-1 ratio on the NYSE where there were 333 new highs and 39 new lows.



On the Nasdaq, 2,660 stocks rose and 1,461 fell as advancing issues outnumbered decliners by a 1.82-to-1 ratio. The S&P 500 posted 34 new 52-week highs and no new lows while the Nasdaq Composite recorded 68 new highs and 69 new lows.

(This story has been refiled to fix the headline to match paragraph 1)

Source: Investing.com