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Traders work on the floor of the New York Stock Exchange (NYSE), June 29, 2023.
Brendan McDermid | Reuters
The Dow Jones Industrial Average gained for the first day in three as Wall Street cheered Arm’s initial public offering and a decent batch of economic data.
The Dow rallied by 329 points, or roughly 1%. The S&P 500 gained about 0.8%, while the Nasdaq Composite moved roughly 0.8% higher.
Arm shares jumped more than 15% after the chip design company started trading Thursday. Arm’s initial public offering was priced at $51 a share Wednesday. Investors hope what’s set to be the biggest tech offering of the year could kickstart a sleepy IPO market.
“I like where it’s trading right now. If it goes down from here, it’s not because the business isn’t great. We can all agree the business is great,” Cerity Partners’ Jim Lebenthal said Thursday on CNBC’s “Halftime Report.”
“The only reason it would go down is because of valuation concerns, and that would spread in my opinion to other sectors of the market where valuation, including Nvidia, is questionable,” Lebenthal added.
In addition, investors digested a raft of economic reports pointing to some tamer core inflation data and a resilient consumer.
August’s producer price index showed core PPI was held in check last month. Core PPI, which excludes food and energy, increased 0.2%, in line with what was anticipated by economists polled by Dow Jones. However, the headline number rose 0.7%, more than the expected 0.4% increase.
That comes after August’s consumer price index on Wednesday showed core CPI, which excludes food and energy, came in slightly above expectations on a monthly basis.
August retail sales came in better than expected, jumping 0.6% against a 0.1% increase expected by economists. Excluding autos, retail sales rose 0.6% last month, more than the forecasted 0.4% increase.
“Like last week, the numbers continue to paint a picture of a robust US economy,” Morgan Stanley Global Investment Office’s Mike Loewengart said. “The catch, as always, is that this can translate into stubborn inflation, as evidenced by the hotter-than-anticipated PPI data.”
While the Federal Reserve is expected to stay the course at its September policy meeting, the European Central Bank on Thursday hiked rates by an expected quarter percentage point. However, the ECB noted inflation is easing and hinted it could be near the end of its rate-hiking campaign.
In the U.S., Fed funds futures pricing data shows a 97% likelihood of rates remaining unchanged next week, according to the CME FedWatch Tool.
Still, even if the central bank holds steady on rates this time, markets will likely continue to be volatile in the coming months. Indeed, fed funds futures pricing data shows a roughly 40% probability that rates will rise at the November meeting.
Elsewhere, Adobe is expected to post quarterly results after the market close Thursday.
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