The S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) traded much of Tuesday’s session in the green with SPY securing a new intraday all-time high of $654.54.
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August’s producer price index (PPI), which measures inflation at the wholesale level, was a major win for the market, showing a monthly fall of 0.1% compared to the consensus estimate for a 0.3% jump. Core PPI, which excludes volatile food and energy items, also fell by 0.1% compared to the estimate for a 0.3% rise. Both readings mark a major reversal from last month when PPI rose by 0.9%, the highest increase in over three years. July’s PPI was revised lower to 0.7% today, providing another encouraging signal for the market.
“Just out: No Inflation!!! ‘Too Late’ must lower the RATE, BIG, right now. Powell is a total disaster, who doesn’t have a clue!!!” Trump said in a Truth Social post on Wednesday following the PPI update. Federal Housing Finance Agency (FHFA) Director Bill Pulte tagged along, quoting the data in an X post and saying “Jerome Powell loses again.”
Meanwhile, the odds of a government shutdown before the end of the year jumped to 56% on Polymarket after Democrats threatened to block a government funding bill that would avert a shutdown on October 1 unless Republicans take action to block a sharp spike in Obamacare premiums, among other demands. The bill requires a minimum of seven Democratic votes within the Senate.
“The ultimate question of whether there’s gonna be a government shutdown at the end of the month is gonna be up to congressional Democrats,” said House Speaker Mike Johnson. “And that’s just the way it is.”
That hasn’t stopped Wall Street from turning more bullish, as three firms raised their year-end S&P 500 (SPX) price targets today. Barclays raised its target to 6,450 from 6,050, citing AI momentum that has supported earnings. Next, Wells Fargo hiked its forecast to 6,650 from between 6,300 and 6,500 on strong AI investment. “There is froth, but as long as AI capex remains intact, the bull market should continue,” said Wells Fargo’s chief equity strategist Ohsung Kwon. Finally, Deutsche Bank believes the benchmark index will close the year at 7,000, up from its prior estimate of 6,550. Chief equity strategist Binky Chadha expects cyclical stocks to pick up the performance, warning that inflation and high valuations remain risks.
The S&P 500 (SPX) closed with a 0.30% gain while the Nasdaq 100 (NDX) returned 0.04%.
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