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Investors Business Daily
Business
JED GRAHAM

Key Fed Inflation Rate Overshoots As Layoffs Jump; S&P 500 Climbs

The Federal Reserve's primary inflation gauge, the core PCE price index, rose more than expected in June. The hurdle to a Fed rate cut in September looks higher after Wednesday's meeting. But the S&P 500 hit a new record high after strong earnings from Microsoft and Meta Platforms.

Meanwhile, announced job cuts surged 140% from a year ago in July, the Challenger, Gray & Christmas outplacement firm reported on Thursday. The data doesn't quite gybe with the Federal Reserve's assessment of a solid labor market on Wednesday.

9:37 a.m. ET

S&P 500 Hits Record

The S&P 500 touched a new record high in the opening minutes of stock market trading on Thursday on the strength of earnings from Microsoft and Meta, which rose 5.6% and 12.5%, respectively.

However, the S&P 500 eased back to a 0.6% gain after futures stood 0.9% higher ahead of this morning's flurry of economic reports.

Meanwhile, the U.S. dollar index is up 0.2% vs. a basket of advanced economy currencies, hitting a two-month high of 99.81.

Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

9:31 a.m. ET

Jobless Claims Held Down By Auto Sector

Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, attributed the mild level of initial jobless claims mostly "to annual maintenance shutdowns at auto plants being deferred or skipped this year." He noted that claims across auto-intensive states ran 10,000 lower than a year ago.

Fed Rate-Cut Odds Slide On Powell Framework

9:06 a.m. ET

Real Goods And Services Spending

Overall personal consumption expenditures rose 0.3% in June after being flat in May. Goods spending increased 0.5% and services spending 0.3%. However, adjusted for price increases, goods spending rose just 0.1%, after falling 0.8% in May and being unchanged in April.

Spending on services rose 0.1% adjusted for inflation for a third straight month.

8:59 a.m. ET

Fed Rate-Cut Odds Hold Steady

Despite the inflation overshoot, odds for a September Fed rate cut were largely unchanged at 39%. That's likely because Wednesday's Q2 GDP report showed the core PCE inflation rate ran high in Q2, running at 2.5% vs. 2.3% forecasts.

8:55 a.m. ET

Personal Income

Personal income rose 0.3% on the month, though wages and salaries rose just 0.1%. Meanwhile, current transfer receipts rose 1% as government social benefits increased by $46.8 billion at an annual rate.

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8:49 a.m. ET

Revisions Push Core PCE Inflation Higher

Core PCE inflation rose 0.256%, actually coming in toward the low side of forecasts. However, revisions to earlier data pushed the 12-month core inflation rate to 2.79%. Actually, on a revised basis the core inflation rate was already at 2.8% in May, rounding up from 2.758%.

8:44 a.m. ET

S&P 500 Futures Still Strong

S&P 500 futures rose 0.9% vs. fair value, little changed from before the PCE inflation data and other 8:30 a.m. ET economic releases.

8:43 a.m. ET

Initial Jobless Claims Low

New claims for jobless benefits edged up to 218,000 in the week through July 26, up 1,000 from the prior week but below 225,000 forecasts. Continuing claims for jobless benefits were unchanged at 1.946 million.

8:39 a.m. ET

Employment Costs Top Forecasts

The Bureau of Labor Statistics said the employment cost index rose 0.9% in Q2, in line with Q1's increase but above 0.8% forecasts. Wages and salaries rose 1%, while benefits rose 0.7%.

8:38 a.m. ET

PCE Inflation A Little Hot

Both the overall personal consumption expenditures price index and the core PCE price index rose 0.3% on the month, as expected. However, the 12-month core inflation rate ticked up to 2.8%, above 2.7% forecasts. Headline inflation rose to 2.6%, above 2.5% estimates.

Challenger Layoffs

U.S. employers announced 62,075 job cuts in July. That's 29% higher than June's 47,999 and 140% above the year-ago total.

So far this year, employers have announced 806,383 job cuts, up 75% from the 460,530 cuts announced in the first seven months of 2024. Government job cuts spearheaded by DOGE have contributed 292,294 job cuts this year, Challenger said.

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