NASDAQ Climbs as Stronger US Growth and Softer Inflation Lift Stocks

US stocks rose on Wednesday, September 30, after softer inflation data eased concerns about an October Federal Reserve rate increase. An upward revision to second-quarter economic growth also supported shares. Technology stocks led the advance as Wall Street entered the final trading session of September and the third quarter.

NASDAQ Leads Wall Street Higher

At 9:55 a.m. Eastern time, the NASDAQ Composite gained 193.57 points, or 0.72%, to 26,991.11. The S&P 500 rose 33.17 points, or 0.43%, to 7,704.01. Meanwhile, the Dow Jones Industrial Average added 50.58 points, or 0.10%, to 51,400.50.

The gains followed two consecutive sessions of losses. On Tuesday, the Dow fell 131.59 points to 51,349.92, while the S&P 500 slipped 0.16% and the NASDAQ lost 0.09%. Rising Treasury yields had weighed on stocks during both sessions.

Alphabet climbed 2.1% in early trading, while Amazon and Apple edged higher. Information technology and energy led the five advancing S&P 500 sectors. However, financial and real estate shares lagged.

More stocks rose than fell across both major exchanges. Advancing shares outnumbered declining shares by 1.52 to one on the New York Stock Exchange and 1.26 to one on the NASDAQ.

Inflation Falls Below Forecasts as Growth Improves

The personal consumption expenditures price index rose 3.4% from a year earlier in August, below economists’ forecast of 3.7%. Prices increased 0.3% from July, compared with expectations for a 0.4% rise.

Core PCE inflation, which excludes food and energy, reached 3% annually. That compared with 3.3% in July and also came in below forecasts. The Federal Reserve uses PCE data to assess price trends when setting interest rates.

Separately, the Commerce Department revised second-quarter GDP growth to an annual rate of 2.2%, up from 1.5%. Consumer spending and business investment in artificial intelligence infrastructure supported the expansion.

Additional revisions lifted first-quarter growth to 2.5% from 2.1%. Second-quarter consumer spending grew at a 3.8% annual rate, compared with the earlier estimate of 3.4%. Domestic private demand increased 4.6%, excluding trade, inventories and government spending.

Fed Rate Expectations Ease as Treasury Yields Retreat

Traders priced in roughly a 35% chance of an October rate increase after the releases. LSEG data put the probability near 45% before the figures. Markets nevertheless continued to anticipate another increase before year-end.

Adam Hetts, global head of multi-asset at Janus Henderson Investors, cautioned that stronger economic activity could keep further tightening in view.

“Strong labor and GDP data suggest the print is unlikely to derail consensus expectations for another rate hike before the end of the year,” Hetts said.

Meanwhile, ADP reported that private employers added 90,000 jobs in September, exceeding the 68,000 forecast. The stronger hiring figure accompanied the better-than-expected growth reading.

The 10-year Treasury yield traded around 5.23% to 5.25%, below Tuesday’s session peak above 5.29%. The 30-year yield also retreated after exceeding 5.6% a day earlier. Brent crude rose Wednesday, following recent declines as Middle East exports recovered.

Company News Moves Boeing, HPE and Mattel

Boeing gained 0.2% after winning a USD 20 billion development contract for the US Navy’s next-generation stealth fighter. Rival Northrop Grumman, which competed for the contract, fell 3.8%.

Hewlett Packard Enterprise climbed 4.4% after raising its long-term networking revenue growth forecast and announcing a USD 1.2 billion agreement with Vultr. Conversely, Moderna dropped 5.8% after Citigroup lowered its rating to ‘sell’ from ‘neutral.’

Mattel declined more than 2% and touched a 52-week low of USD 12.53. The toy company named board member Roger Lynch as chief executive and chairman, with his appointment taking effect by November 2.

Micron rose ahead of earnings after Wednesday’s close. Through Tuesday, the S&P 500 and NASDAQ had gained about 2% during the quarter, while the Dow had fallen almost 2%. September returns also remained mixed across the three indexes.

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