Wall Street surges following publication of consumer price data

Wall Street main indexes saw gains on Wednesday, driven by data indicating a modest rise in consumer prices during August.

The S&P 500 increased by 0.12 percent, closing the session at 4,467.44 points. The Nasdaq experienced a 0.29 percent increase, reaching 13,813.59 points. Meanwhile, the Dow Jones Industrial Average slipped by 0.20 percent to settle at 34,575.53 points.

The S&P 500 consumer discretionary index saw a 0.9 percent increase, driven by the strong performance of Ford Motor. Meanwhile, the S&P 500 utilities index saw a 1.2 percent increase. Analysts say the upcoming producer price and retail sales data contribute to the sub-index's increase.

Keith Buchanan, a portfolio manager at GLOBALT Investments, said the increase "points to skittishness among equity holders" following the consumer price index (CPI).

Data revealed that in August, consumer prices saw their largest increase in 14 months due to a surge in gasoline prices. However, the annual increase in core inflation was the smallest in almost two years.

Gasoline prices reached their highest point at $3.984 per gallon in the third week of the month. It was up from $3.676 per gallon in July's equivalent period.

Victoria Fernandez, chief market strategist at Crossmark Global Investment, noted that there had been an expectation of a rise in headline inflation due to oil and gas prices.

"I don't think the Fed wants to throw a shock and do a 25-basis-point hike when the expectations are that they won't, but rate hikes are not completely off the table for the rest of the year," said Fernandez.

Traders currently estimate a 97 percent probability that the Fed will keep rates steady in September, as indicated by the CME FedWatch Tool. Inflation in the services sector remained steady, further supporting a case of a November rate hike. The market estimates a 39 percent chance of a rate hike in November.

The increase in Wall Street main indexes also strengthened expectations that the Federal Reserve might opt to keep interest rates steady next week.

Declining yields boost stock market

Prominent mega-cap growth stocks — Tesla, Meta Platform, Microsoft and Amazon.com- saw gains ranging from 1.1 to two percent as U.S. Treasury yields retreated from their daily highs.

Initially, traders engaged in short-selling of short-term U.S. debt. By the afternoon session, they reversed their positions and re-entered the market. The rate-sensitive two-year yield declined by 0.03 percentage points to 4.98 percent.

Moderna experienced a 3.2 percent increase following the drug manufacturer's announcement of mRNA-1010 — a flu vaccine — successfully achieving its primary objective in a late-stage trial. The company also revealed plans to reduce the production of its COVID-19 vaccine.

Citigroup saw a 1.7 percent increase following CEO Jane Fraser's announcement of a significant management restructuring. It will lead to further job reductions and grant her more control over the bank to simplify its structure.

In contrast, Apple experienced a 1.2 percent decline, marking its second consecutive day of losses. It followed the unveiling of new iPhones on Tuesday despite keeping prices unchanged.

Shares of Chinese electric vehicle manufacturers Nio and Xpeng, listed in the U.S., fell by 4.7 percent and 3.1 percent, respectively. It was due to the European Commission initiating an investigation to determine if their vehicles should face punitive tariffs.

Spirit Airlines saw a more than six percent decline as the low-cost carrier adjusted its third-quarter revenue forecast to account for increasing fuel costs.