Tech Strength and Fed Outlook Lift Markets; Oil Ticks Higher on Geopolitical Risks

Wall Street enjoyed a positive performance last week, fueled by growing expectations of a Federal Reserve interest rate cut. Each of the benchmark indexes finished the week with gains. The NASDAQ recorded a fresh record high as tech shares continued to lead the market. Investors saw the economy slowing just enough to warrant an interest rate cut but not so much as to trigger a recession. Ten-year Treasury bond yields rose last Friday, recovering some of the sharp losses from earlier in the week. The recent decline in yields, in anticipation of the aforementioned rate cut, has been a positive for the housing sector (with mortgage rates declining) and for stocks. Crude oil prices ticked higher as Ukrainian drone strikes raised concerns over potential disruptions to Russian oil exports.

Consumer Prices Rise in August, Driven by Shelter and Food

The Consumer Price Index (CPI) increased 0.4% in August after rising 0.2% in July. For the 12 months ended in August, the CPI increased 2.9% after rising 2.7% over the 12 months ended in July. The index for shelter rose 0.4% in August and was the largest factor in the overall monthly increase. Food prices increased 0.5% over the month as food-at-home prices rose 0.6%, while prices for food away from home increased 0.3%. Prices for energy rose 0.7% in August as gasoline prices increased 1.9% over the month. Prices less food and energy (core prices) rose 0.3% in August, the same increase as in July.

Eye on the Week Ahead

The Federal Open Market Committee holds its meeting this week, the outcome of which is expected to be a 25-basis-point cut in the federal funds target rate range.