Wall Street Stocks Lacked Direction After Stubborn Inflation Stays Above Fed's Target Rate In August

Arjun Pandit
13 Sep, 2023
New York City

Market indexes on Wall Street traded higher after investors reviewed the latest inflation report. 

Overall inflation accelerated for the second month in August to 3.7% from 3.2% in July, the U.S. Bureau of Labor Statistics reported Wednesday. 

The inflation picked up following the increase in oil prices in the last two months and weaker comparison from the previous year and cost of transportation services picked up in the month. 

Core inflation, which exclude energy and food, slowed for the fifth month in a row to 4.3% from a year ago and rose 0.3% from the previous month. 

The inflation data measured by the government understates the price increases faced my most urban families with children. The government data vastly understates housing price inflation and cost of shelter in most urban cities across the nation.  

Overall inflation faced my most families, when including home price inflation, could run into upper double digits. 

The yield on U.S. Treasury bonds and notes were nearly unchanged after the release of consumer price inflation data and focus shifted to wholesale price inflation data scheduled to be released on Thursday. 

Despite multiple interest rate hikes over the last sixteen months, inflation has cooled largely because of base effect and rate of price increases has stayed above the Fed's preferred target range of 2%. 

 

U.S. Indexes & Yields 

The S&P 500 index inched up 0.2% to 4,472.03 and the Nasdaq Composite added 0.3% to 13,809.52.

The yield on 2-year Treasury notes hovered near 5.01%, 10-year Treasury notes inched slightly higher to 4.28% and 30-year Treasury bonds edged down to 4.37%. 

Crude oil increased $0.29 to $89.12 a barrel and natural gas prices increased 0.05 cent to $2.69 a thermal unit. 

The dollar index edged lower to  104.62 mark and hovered near the 105 mark reached last week but higher than the low of 99.85 on July 13. 

Last week, the dollar index, which tracks the price of the U.S. dollar against major currencies, halted a five-day rally Friday but extended gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates. 

 

U.S. Stock Movers 

American Airlines Group Inc declined 4.5% to $13.42 after the international carrier said higher crude oil prices are expected to hurt quarterly profit. 

The airline estimated third quarter adjusted earnings per share between 20 cents and 30 cents, citing higher fuel prices and a new compensation terms with pilot unions. 

Spirit Airlines Inc dropped 3.3% to $16.70 after the discount carrier lowered its third quarter revenue estimate and operating margin of as much as -15.5% from the previous estimate of between -5.5% and  -7.5%. 

Moderna Inc increased 5.1% to $110.82 after the Center for Disease Control and Prevention recommended new Covid 19 vaccine for all Americans older than 6 months and older.