S&P 500 dips, Nasdaq higher after data shows moderate inflation rise

The US Commerce Department reported that the Personal Consumption Expenditures (PCE) price index rose 3.4% annually in August, lower than the 3.7% estimate. The stock market responded to this moderate inflation data, with the Nasdaq rising while the S&P 500 fell. Both indexes had marked their second consecutive quarterly gains as investors grew less certain about impending Fed rate hikes.

The PCE increase came despite higher crude oil prices due to the US-Iran conflict and elevated diesel fuel costs. This inflation news led to a slight uptick in US Treasury yields, which often correlate with expectations of Fed rate increases. Despite the mixed economic signals, market participants were optimistic about the economy's growth potential, as reflected in the strong performance of companies like Microsoft, Apple, and Nvidia.

Fed officials emphasized their commitment to curbing inflation without jeopardizing the labor market, while some analysts warned that persistently high rates could pose risks to credit availability and corporate profitability.