SPX: boosted by lower inflation

30 sept.

The Fed's rate cut and further slowdown of the US inflation boosted the US equity markets, where S&P 500 reached the newly fresh all-time highest level as of the end of the previous week. The highest weekly level reached was 5.761, while the index is closing the week at the level of 5.738. Released inflation data showed that the Fed's favorite inflation gauge, the PCE index slowed down further to the level of 2,2% y/y in August, below market consensus, which increased sentiment in investors that the Fed might confidently cut rates further during the year. On the other hand, the environment of decreasing interest rates will be supportive to business, increasing expectations of higher profitability in the coming period.

Analysts are noting that, with a cooling inflation, the Fed might now fully focus on the labor market in the coming period, and expect a positive impact for the further strengthening of the US economy. Aside from the tech companies, the materials sector especially gained during the week, adding a 3,4% to the value of stocks in this sector for the week. There are analysts who are pointing that the financial sector might also gain in the coming period, with an increase in lending activity.