Wall Street closed with minimal changes on Thursday as investors eagerly anticipated the release of fresh inflation data. The major indices showed little movement, with the S&P 500 and Nasdaq managing to eke out slight gains while the Dow Jones Industrial Average remained relatively flat.
Market Performance and Investor Sentiment
The S&P 500 inched up by 0.09%, or 5.16 points, to close at 5,483.06, while the tech-heavy Nasdaq Composite gained 0.30%, or 53.53 points, reaching 17,858.68. The Dow Jones Industrial Average rose by a modest 0.09%, or 36.53 points, settling at 39,164.33.
Ross Mayfield, investment strategy analyst at Baird, commented on the market's subdued performance: "The market is in a bit of a holding pattern here for the PCE because there hasn't been a lot of big catalysts". This statement underscores the cautious approach investors are taking as they await the release of the monthly personal consumption expenditures (PCE) price index, which is the Federal Reserve's preferred gauge of inflation.
Economic Data and Its Impact
The day's trading was influenced by several economic indicators released on Thursday. New orders for key U.S.-manufactured capital goods unexpectedly fell in May, while core durable goods orders decreased by 0.1%, contrary to forecasts of a 0.2% rise. These figures have bolstered investor beliefs that a weakening economy could prompt the Federal Reserve to consider cutting interest rates as early as September .
Additionally, weekly jobless claims fell to 233,000, slightly below expectations of 236,000. A final print also revealed that U.S. economic growth in the first quarter increased more than initially estimated .
Market Movers and Sector Performance
Megacap stocks showed strength as U.S. Treasury yields slipped. Alphabet and Meta Platforms firmed up by 0.83% and 1.25% respectively, while Amazon rose an impressive 2.19% after hitting the $2 trillion market value milestone for the first time on Wednesday .
However, not all sectors saw positive movement. Walgreens Boots Alliance experienced a significant drop of 22.2% following disappointing results and a revised outlook that could lead to the closure of hundreds of stores in the coming years .
Investor Focus on Inflation Data
The market's muted performance reflects investors' focus on the upcoming PCE price index release. This crucial inflation indicator is expected to provide insights into the Federal Reserve's future monetary policy decisions, particularly regarding interest rate cuts.
Market participants have largely maintained their view of approximately two rate cuts this year, as per LSEG's FedWatch data. However, the Fed has only projected one cut, and there's a 59.5% chance of a cut in September .
Looking Ahead
As Wall Street closes another trading day with subdued activity, all eyes are now on Friday's inflation report. The data will be pivotal in shaping market sentiment and potentially influencing the Federal Reserve's approach to monetary policy in the coming months.
Investors and analysts alike will be closely monitoring these figures, as they could provide valuable insights into the trajectory of the U.S. economy and the potential for future interest rate adjustments. The market's reaction to this data will likely set the tone for trading in the days and weeks to come.
While Wall Street ended the day with minimal changes, the underlying tension and anticipation for the upcoming inflation data underscore the importance of economic indicators in shaping market dynamics. As always, investors are advised to stay informed and maintain a balanced approach to their investment strategies in these uncertain times.
