Stocks Steady Amid Cooling Inflation and Rising Jobless Claims

U.S. stocks remained relatively unchanged on Thursday as investors analyzed the latest inflation and labor market data, which could provide insights into the Federal Reserve's upcoming interest rate decision.

Navigating the Shifting Economic Landscape

Inflation Pressures Ease, but Jobless Claims Climb

The August Producer Price Index (PPI) showed that wholesale prices rose 0.2% month-over-month, slightly above economists' expectations. However, the annualized PPI increase of 1.7% was in line with forecasts, and July's reading was revised downward, indicating that inflationary pressures may be cooling. This data could influence the Federal Reserve's decision on the size of the upcoming interest rate cut.Meanwhile, initial jobless claims climbed more than expected to 230,000 last week, an increase of 2,000 from the prior weekly period. This unexpected rise in unemployment claims could also factor into the Fed's policy considerations.

Market Reaction and Investor Sentiment

The S&P 500 (^GSPC) and the Nasdaq Composite (^IXIC) were largely flat on Thursday, coming off sharp closing gains driven by a tech rally the previous day. The Dow Jones Industrial Average (^DJI) also saw little change.Investors are closely monitoring these economic indicators as they try to gauge the Federal Reserve's next move. The markets have widely anticipated a rate cut, but the magnitude of the cut remains uncertain. The latest data has caused some fluctuations in the odds of a 25-basis-point cut, with the probability now standing at 87%, up from 50% just days ago.

Corporate Spotlight: Moderna's Outlook Shift

In corporate news, shares of Moderna (MRNA) plummeted 17% after the biotech giant lowered its annual revenue outlook for 2025. The company also announced plans to slash its annual R&D budget by approximately $1.1 billion by 2027, signaling a shift in its strategic priorities.This development in the biotech sector could have broader implications for the overall market sentiment, as investors closely follow the performance and outlook of key industry players.

Airline Resilience: Delta's Positive Outlook

In contrast to the Moderna news, Delta Air Lines (DAL) provided a strong outlook, stating that its full-year adjusted earnings per share will be at or above $6.50, compared to a previous range of $6 to $7. This positive guidance came despite the airline's recent experience with a global tech outage in July.Delta's resilience in the face of operational challenges underscores the industry's ability to adapt and maintain profitability, which could be a reassuring signal for investors navigating the broader economic landscape.

Navigating Uncertainty: Investors Weigh Data and Fed Expectations

As the Federal Reserve prepares to convene its policy meeting next week, investors are carefully analyzing the latest economic data to gauge the central bank's potential actions. The cooling inflation pressures and unexpected rise in jobless claims have introduced some uncertainty, leading to fluctuations in the market's expectations for the size of the upcoming rate cut.Investors will continue to closely monitor the evolving economic landscape and corporate performance, seeking to position themselves for potential shifts in the market's direction. The interplay between inflation, employment, and the Fed's policy decisions will be a key focus as the market navigates the current period of uncertainty.