Stocks moved higher on Wednesday, September 30, buoyed by softer-than-expected inflation metrics that alleviated worries about a potential Federal Reserve interest rate hike in October. Equities also found support from an upward revision to the growth rate of the economy in the second quarter. Technology shares spearheaded the market’s advance as Wall Street closed out both 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 reach 26,991.11. The S&P 500 advanced 33.17 points, or 0.43%, landing at 7,704.01, while the Dow Jones Industrial Average added 50.58 points, or 0.10%, bringing it to 51,400.50.
These gains followed two straight sessions in the red. On Tuesday, the Dow dropped 131.59 points to 51,349.92, the S&P 500 slipped 0.16%, and the NASDAQ fell 0.09%, with climbing Treasury yields dragging down stocks over both days.
Alphabet shares advanced 2.1% during early trading, accompanied by minor gains for Amazon and Apple. Information technology and energy spearheaded the five advancing sectors within the S&P 500, whereas financial and real estate issues lagged.
Advancers outnumbered decliners across the major exchanges. Winning stocks surpassed losers by a ratio of 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
During August, the personal consumption expenditures price index climbed 3.4% on an annual basis, coming in under the 3.7% increase anticipated by economists. Prices grew 0.3% compared to July, falling short of the forecasted 0.4% advance.
Core PCE inflation, which strips out food and energy costs, stood at 3% year-over-year. This represented a drop from July’s 3.3% rate and also missed expectations to the downside. The Federal Reserve relies on PCE figures to evaluate price movements when determining monetary policy.
In a separate report, the Commerce Department adjusted its second-quarter GDP growth figure to an annual rate of 2.2%, up from the initial 1.5% estimate. This expansion was bolstered by consumer spending and business investments in artificial intelligence infrastructure.
Further revisions bumped first-quarter growth up to 2.5% from 2.1%. Second-quarter consumer spending rose at an annual rate of 3.8%, exceeding the earlier 3.4% projection. Meanwhile, domestic private demand increased by 4.6% when excluding trade, inventories, and government expenditures.
Fed Rate Expectations Ease as Treasury Yields Retreat
Following the data releases, traders priced in roughly a 35% probability of an October rate increase, down from about 45% according to LSEG figures prior to the reports. Even so, markets continued to project another rate hike before the year concludes.
Adam Hetts, global head of multi-asset at Janus Henderson Investors, warned that robust economic activity could keep additional monetary tightening on the table.
“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 stated.
In addition, ADP reported that private-sector employers added 90,000 jobs in September, outperforming the forecast of 68,000. This stronger hiring tally arrived alongside the better-than-expected economic growth figures.
The 10-year Treasury yield hovered between 5.23% and 5.25%, pulling back from Tuesday’s session high above 5.29%. The 30-year yield similarly declined after sitting above 5.6% a day prior. Meanwhile, Brent crude ticked upward on Wednesday following recent pullbacks driven by the recovery of Middle East exports.
Company News Moves Boeing, HPE and Mattel
Boeing shares moved up 0.2% after securing a USD 20 billion development contract for the U.S. Navy’s next-generation stealth fighter. Conversely, competitor Northrop Grumman, which also vied for the deal, dropped 3.8%.
Hewlett Packard Enterprise added 4.4% on the back of an upgraded long-term networking revenue growth outlook alongside a USD 1.2 billion agreement with Vultr. On the other hand, Moderna slid 5.8% after Citigroup downgraded the stock from ‘neutral’ to ‘sell.’
Mattel fell over 2% to touch a 52-week low of USD 12.53. The toy maker appointed board member Roger Lynch as chief executive officer and chairman, with his new role slated to begin by November 2.
Micron gained ground ahead of its earnings report scheduled for after Wednesday’s closing bell. Through Tuesday’s close, both the S&P 500 and the NASDAQ had advanced roughly 2% for the quarter, whereas the Dow had declined nearly 2%. September performance figures likewise remained mixed across all three benchmarks.
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