The S&P 500 exhibited minimal movement on Friday following a market rally that reached new highs, as investors interpreted indications of a softening labor market and subdued inflation as a signal that the Federal Reserve is poised to reduce interest rates in the upcoming week. The benchmark experienced a decline of less than 0.1%, whereas the Nasdaq Composite increased by 0.1%, reaching a new all-time high. The Dow Jones Industrial Average experienced a decline of 39 points, representing a decrease of 0.1%.

On Thursday, the blue-chip Dow experienced an increase of over 600 points, while the S&P 500 rose by 0.9% and the tech-focused Nasdaq Composite saw an advancement of 0.7%. All three major averages concluded at unprecedented heights, with the Dow surpassing 46,000 for the inaugural occasion. The consumer price index recorded a month-to-month rise of 0.4% for August, surpassing the anticipated 0.3%. Nonetheless, the index’s 2.9% increase over a 12-month period aligned with projections. The typically significant inflation report was eclipsed, which revealed an unexpected increase to the highest level since October 2021.

The number of workers applying for unemployment compensation for the week ending September 6 rose by 27,000 to reach 263,000, surpassing the anticipated total of 235,000. “CPI report has been overshadowed by the jobless claims report,” stated Seema Shah. “Although the CPI report is slightly above expectations, it is unlikely to cause the Fed any pause as they prepare to announce a rate cut next week.” The increase in jobless claims is expected to add a layer of urgency to the Federal Reserve’s decision-making process, with Powell likely indicating that a series of rate cuts may be forthcoming. Futures markets indicate a high probability of a quarter percentage point increase at the conclusion of the Federal Reserve’s meeting on September 17.

The S&P 500 and Nasdaq have experienced an increase of approximately 1.6% week to date, whereas the Dow has seen a rise of 1.5%. The S&P 500 is poised for its most favorable weekly performance since early August, marking its fifth positive week out of the last six, while the Nasdaq is set to achieve its second consecutive winning week. The Dow is set to record its inaugural positive week in three.