Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed Thursday’s trading session with muted price action.
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In another sign that inflation could be making a comeback, July’s Producer Price Index (PPI), which tracks wholesale price inflation, increased by 0.9% month-over-month, above the estimate of 0.2%. That signals the largest monthly rise since June 2024. On an annual basis, PPI jumped by 3.3%, above the estimate of 2.5%. Core PPI also came in above expectations, rising by 0.9% month-over-month and 3.7% year-over-year. Economists were expecting 0.2% and 2.9%, respectively. The higher-than-expected PPI follows July’s core Consumer Price Index (CPI) rising by 3.1%, ahead of the estimate for 3.0%.
With inflation coming back, the odds of a 50 bps rate cut during the September 16-17 Federal Open Market Committee (FOMC) meeting fell back down to 0% after rising to 5.7% on Wednesday, according to CME’s FedWatch tool. The odds of the federal funds rate remaining steady increased to 7.4% from 0% a day ago.
San Francisco Fed President Mary Daly voiced her opposition to a 50 bps cut, arguing that the resiliency of the labor market doesn’t call for it.
“Fifty sounds, to me, like we see an urgent—I’m worried it would send off an urgency signal that I don’t feel about the strength of the labor market,” said Daly in a Wall Street Journal interview. “I just don’t see that. I don’t see the need to catch up.” Daly reiterated her view that two rate cuts this year seem reasonable. She would support three cuts “if we saw more signs that the labor market was more precarious.”
Meanwhile, the Trump administration is in talks with Intel (INTC) for the U.S. government to take a stake in the embattled chipmaker, according to Bloomberg. The investment would contribute to the company’s planned domestic manufacturing efforts and its factories in Ohio. Earlier this week, Intel CEO Lip-Bu Tan met with Trump at the White House. Trump had previously called for Tan to step down due to his investments in Chinese chip companies.
“We look forward to continuing our work with the Trump administration to advance these shared priorities, but we are not going to comment on rumors or speculation,” Intel said in response to the report. INTC stock closed higher by 7.3% on the news.
On the trade front, the U.S. has sent the European Union a document outlining the terms of a trade deal, according to the Wall Street Journal. “Now we ping-pong it forward and back until we get to a final text, and I hope we can get there soon,” said EU Commission spokesperson Olof Gill. In July, Trump and EU President Ursula von der Leyen agreed to a handshake trade agreement that would see EU imports receive a 15% baseline tariff with lower rates for some industries, like semiconductors and pharmaceuticals.
The S&P 500 (SPX) closed with a 0.03% gain while the Nasdaq 100 (NDX) fell by 0.07%.
