Getting past sticky core inflation

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Stubborn core inflation
US prices rose 0.2% in August, according to the Bureau of Labor Statistics, in line with the Dow Jones consensus. 12-month inflation was 2.5%, the lowest since February 2021. However, the core CPI, which excludes food and energy prices, rose 0.3%, 10 basis points higher than expected.

Rebound rally
Major US indexes closed higher on Wednesday in a choppy session lifted by tech stocks. Asia-Pacific markets traded higher on Thursday. of Japan Nikkei 225 increased by 3.43% and Taiwan Weighted Index increased by 3%. Including chip-related Asian stocks Tokyo Electronic, Advantage and TSMC US tech stocks rose following a rally.

UBS CEO sees soft landing
Sergio Ermotti, Group CEO UBS Group AGInvestors who expect the Fed to cut rates aggressively are “going ahead of the curve,” he told CNBC. Sticky inflation remains the “most important” issue, he added – surprising the August core CPI rise. However, Ermotti still sees “the look (is) pretty consistent with the soft landing.”

Harris or Trump? Little difference for China
Carlos Casanova, the chief economist of the Swiss private bank UBP, said that regardless of who wins the US presidential elections, the country’s trade relations with China will remain tense. Donald Trump has proposed tariffs of up to 100%, while Kamala Harris is expected to stick with Joe Biden’s tariff policy, which not only maintains Trump-era tariffs, but increases them.

(PRO) Opportunities for semiconductor resources
Semiconductor stocks have been a market favorite this year and are responsible for driving the S&P 500 to consecutive fresh highs. However, they have had a wild swing since July. With some chip stocks undervalued, they look like good buys amid this volatility, analysts said.

On the surface, Wednesday looked like a great day for investors.

The S&P 500 It increased by 1.07% Dow Jones Industrial Average It added 0.31% and Nasdaq Composite It rose 2.17%.

However, these figures hide unrest beneath their beautiful facades.

The S&P fell about 1% during trading, but eventually managed to pare back losses and gain more than 1% by the end of the day. The broad-based index has done so for the first time since October 2022.

The consumer price index for August caused the initial decline. Core inflation, which the Fed focuses more on as it more accurately reflects price movements, was slightly higher than expected for the month.

Core inflation was higher than the headline count, as food and energy prices were excluded from earlier. And both were moderate for the month: Food prices were only 0.1% higher, indicating no pets needed to be fed, while energy costs fell 0.8%.

Still, these data mean the Fed is unlikely to make a modest 50-basis-point cut. The disappointment translated into a decline in the stock.

Even if inflation is difficult to cope with, it does not mean that consumers are worse off. Real earnings rose 0.2% for the month, a separate report from the Bureau of Labor Statistics showed, meaning income growth outpaced price growth.

That could have helped the S&P rise on the day.

As for the Nasdaq, it rose with technology stocks seeing a big bounce from the previous days’ declines. Nvidia It rose 8%, likely on reports that the U.S. may allow the chipmaker to sell advanced chips to Saudi Arabia, according to Reuters.

But there may be more turbulence in the markets. The US government is close to shutting down again due to policy related to government funding. The US House of Representatives has almost no concept of a plan.

– CNBC’s Jeff Cox, Pia Singh and Lisa Kailai Han contributed to this story.