Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) secured new intraday all-time highs on Thursday as the market continues to climb higher.
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The record highs come amid troubling jobs and inflation data. For the week ended September 6, initial jobless claims grew by 27,000 to 263,000, the highest amount in nearly four years and above the estimate of 235,000. Continuing jobless claims edged down to 1.939 million from 1.940 million and were below the estimate of 1.950 million. At the same time, the reading remains elevated compared to recent years.
August’s Consumer Price Index (CPI) notched a monthly gain of 0.4%, above the estimate of 0.3% and marking the highest rate of growth since January. It grew by 2.9% year-over-year, in line with the estimate but rising from 2.7% in July. Core CPI, which excludes volatile food and energy prices, rose by 0.3% month-over-month and 3.1% year-over-year. Both figures matched their estimates.
The new data could complicate the Fed’s monetary policy decision at the September 16-17 Federal Open Market Committee (FOMC) meeting and at the two remaining meetings scheduled this year in October and December. Inflation remains above the central bank’s long-term target of 2.0%, which calls for stable or higher rates. At the same time, a weak labor market calls for lower rates, as cheaper borrowing can stimulate employment and the economy. The odds of a Fed rate cut this month still remain at 100%, according to CME’s FedWatch tool, although the chances of a 50 bps cut have fallen to 5.1% compared to 8.9% yesterday.
“While the CPI report is a tad hotter than expected, it will not give the Fed a moment of hesitation when they announce a rate cut next week,” wrote Principal Asset Management’s Sheema Shah. “If anything, the jump in jobless claims will inject a bit more urgency in the Fed’s decision making, with Powell likely signaling a sequence of rate cuts is on the way.”
Meanwhile, UBS said that “hard data” from May to July within its proprietary model indicates a 93% chance of a recession. At the same time, the bank’s economic team isn’t calling for a recession because the data has drifted sideways since May, which “suggests sustained weakness rather than any new acceleration downward.” UBS expects “soggy growth” before a recovery in 2026.
The S&P 500 (SPX) closed with a 0.85% gain while the Nasdaq 100 (NDX) returned 0.60%.
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