US stocks surge post PCE data

Wall Street stocks tended to show mixed performance until after Thursday afternoon with fresh inflation data hinting at the easing in inflation that the Fed policymakers are looking for. The Dow Jones Industrial Average retreated 0.15%, or about 50 points, even as it was buoyed by a jump in Salesforce shares after the software giant’s AI-fueled earnings beat.

The S&P 500 (GSPC) lifted just above the flat line, adding 0.08%, while the tech-heavy Nasdaq Composite added roughly 0.3%. The Personal Consumption Expenditures Index showed the Fed’s preferred inflation measure edged higher in July, with both headline and “core” readings in line with expectations.

Capital Economics economist Paul Ashworth wrote in a note to clients that despite the apparent strength of real demand, inflationary pressures continued to ease. US jobless claims fell to 228,000 last week, undershooting expectations for 235,000, according to official figures released Thursday.

This provides context for the August jobs report due out on Friday, which is important for the Fed’s decision-making in its effort to moderate price pressures. The labour market has changed from being one where job searchers had plenty of chances to one where employers now hold the sway.

Tens of millions of people quit their employment during the Great Resignation in favour of higher paying service jobs, new occupations, or promotions at rival companies. According to the most recent Job Opening and Labour Turnover Survey (JOLTS) data, in July, there were fewer available opportunities in the US than at any time in the previous two years. The report also showed a decline in the resignation rate, an indicator of workers’ confidence in their ability to find work.