U.S. stocks initially declined but then rose, with the Nasdaq rebounding by over
**Three major stock indexes closed higher, with the S&P 500 up 1.1%;
**August CPI released, medium to long-term US Treasury yields rebound slightly;
**The world's largest lithium miner, Albemarle, surges over 13%.
On Wednesday, US stocks rebounded after an initial decline, with the latest inflation data suggesting a 25 basis point interest rate cut by the Federal Reserve next week, and technology stocks staged a strong recovery. By the close, the Dow Jones Industrial Average rose by 124.75 points, or 0.31%, the Nasdaq Composite jumped 2.17% to 17,395.53, and the S&P 500 Index gained 1.07% to 5,554.13.
Market Overview
The US Department of Labor reported that the Consumer Price Index (CPI) increased by 2.5% year-over-year in August, the lowest since February 2021, and was up 0.2% month-over-month, in line with July. The core CPI (excluding more volatile food and energy components) rose 0.3% month-over-month, slightly exceeding market expectations.
Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott, said, "The possibility of a 50 basis point rate cut seems to have been ruled out, and the core month-over-month indicates acceleration, which seems to have helped the market expectations regain their footing."
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Medium to long-term US Treasury yields rebounded from their yearly lows, with the 2-year note rising to 3.64% and the benchmark 10-year note climbing to 3.65%. According to the FedWatch tool from the Chicago Mercantile Exchange, traders now believe there is an 85% chance of a 25 basis point rate cut by the Federal Reserve.
Jack Janasiewicz, Portfolio Manager at Natixis Investment Managers, said, "Perhaps the market is looking for a more moderate inflation reading, which would give the Fed more reason to cut rates by 50 basis points next week. Over time, investors may have come to terms with the inflation data, and the technology sector's strength has helped support a broader market."
On the individual stock front, Nvidia surged 8% on reports that the US government is considering allowing Nvidia to export advanced chips to Saudi Arabia, which also led to a more than 5% rise in the Philadelphia Semiconductor Index.Apple's stock rose by 1.2%, with TechInsights predicting that the shipment volume of the Apple iPhone 16 series will surpass that of its predecessors, with a global shipment volume forecast of 73 million units for the year 2024.
Amazon's stock increased by 2.8% after the company announced on Wednesday an investment of £8 billion to develop its cloud business in the UK. The UK Treasury stated that Amazon Web Services (AWS) will support up to 14,000 jobs and contribute £14 billion to the UK GDP through a five-year investment in data centers from 2024 to 2028.
The financial sector rebounded from a low, with Goldman Sachs up by 0.9% and JPMorgan Chase up by 0.8%. Previously, the industry had been negatively affected by warnings of declining trading revenues, slower-than-expected recovery in investment banking, and the impact of upcoming interest rate cuts on interest income.
The world's largest lithium miner, Albemarle, saw a significant surge of 13.6%. Reports suggest that Contemporary Amperex Technology Co. Limited (CATL) will adjust its lithium carbonate production plans, driving up the price of lithium mines.
GameStop's stock fell by nearly 12% after the video game retailer announced plans to issue up to 20 million additional shares and reported a decline in second-quarter revenue.
International oil prices rebounded significantly due to a drawdown in crude oil inventories and the potential impact of Hurricane Francine in the Gulf of Mexico on production capacity. The near-month contract for WTI crude oil rose by 2.37%, trading at $67.31 per barrel, while the near-month contract for Brent crude oil increased by 2.05%, trading at $70.61 per barrel.

As expectations for interest rate cuts change, international gold prices experienced a rise and subsequent retreat. The COMEX gold futures for delivery in September at the New York Commodity Exchange fell by 0.01%, settling at $2,512.10 per ounce.