[New York Stock Market] All Three Major Indexes Hit Record Highs on Rate Cut Hopes... Dow Up 1.36%

On September 11 (local time), all three major U.S. stock indices in New York rose simultaneously, closing at record highs. This was driven by the Consumer Price Index (CPI) for the previous month meeting expectations and new unemployment claims reaching their highest level in four years, further fueling hopes for a rate cut this month.

On this day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average closed at 46,108, up 617.08 points (1.36%) from the previous trading day. The S&P 500 Index, which focuses on large-cap stocks, rose 55.43 points (0.85%) to finish at 6,587.47. The tech-heavy Nasdaq Index jumped 157.014 points (0.72%) to close at 22,043.075.

Reuters Yonhap News

The U.S. Bureau of Labor Statistics announced that the Consumer Price Index (CPI) for August rose 2.9% year-on-year. Although this was a larger increase than July’s 2.7%, it was in line with market forecasts. On a month-on-month basis, CPI rose 0.4%, slightly higher than the market expectation of 0.3%.

The core CPI, which excludes volatile food and energy prices, rose 3.1% year-on-year and 0.3% month-on-month, both matching market expectations.

Concerns about employment have grown further. For the week ending September 6, new unemployment claims totaled 263,000 on a seasonally adjusted basis. This significantly exceeded the market forecast of 235,000 and marked the highest level since the week ending October 23, 2021 (268,000 claims).

Although the CPI remains above the Federal Reserve’s target of 2%, the market expects the Fed to cut rates in response to weakness in the labor market. However, the likelihood of a 0.5 percentage point "big cut" appears to have diminished.

Archi Shesh, Chief Credit Officer at Moody’s Ratings, said, "Inflation remains sticky," adding, "Whether this is called stagflation depends on individual definitions. However, we are clearly in an unusual phase that is different from the past few years." He continued, "The labor market is slowing significantly, but inflation is not following suit." He predicted that the Federal Reserve will lower rates by 0.25 percentage points next week and cut an additional 0.25 percentage points by the end of the year.

According to CME FedWatch, the federal funds futures market on this day reflected a 92.8% probability that the Fed will cut the current 4.25-4.5% rate by 0.25 percentage points in September, and a 7.2% probability of a 0.5 percentage point cut.

Among big tech companies, Tesla rose 6.04%, and Apple gained 1.43%. Oracle, which had surged the previous day, fell 6.3%, giving back some of its gains.

In the semiconductor sector, Nvidia slipped 0.08%, while Micron Technology jumped 7.55% after Citigroup raised its target price from $150 to $175.

After the Wall Street Journal (WSJ) reported that Paramount Skydance is preparing to acquire Warner Bros. Discovery, Paramount Skydance and Warner Bros. Discovery closed up 15.55% and 28.95%, respectively.

U.S. Treasury yields were mixed. The 10-year Treasury yield, a global bond benchmark, briefly fell below 4% before ending at 4.021%, down 1.1 basis points (1bp=0.01 percentage point) from the previous day. The 2-year Treasury yield, which is sensitive to monetary policy, rose 0.9 basis points to 3.542% from the previous day.