Wall Street is on course for another record finish this afternoon after a mixed set of US economic data reinforced expectations that the Federal Reserve will cut interest rates to support growth.
The S&P 500 rose 0.7pc, setting up the index for a third consecutive all-time high. The Dow Jones Industrial Average gained 1pc, while the Nasdaq Composite advanced 0.4pc.
Treasury yields saw-sawed in early trading but ultimately eased after the release of fresh reports, which investors interpreted as strengthening the case for rate cuts when the Fed meets next week.
One of the data points showed an increase in applications for unemployment benefits, hinting that redundancies may be on the rise. For investors, the ideal outcome has been a controlled cooling of the economy—weak enough to encourage rate cuts, but not so severe that it tips into recession.
The central bank has so far resisted reducing rates this year, wary that Donald Trump’s tariffs could worsen inflationary pressures.
Thursday’s inflation report showed consumer prices were 2.9pc higher in August than a year earlier, up slightly from July’s 2.7pc. While this remains above the Fed’s 2pc target, the figure was in line with forecasts and not seen as alarming enough to outweigh concerns about the softening labour market.
“Right now, inflation is a key subplot, but the labour market is still the main story,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
