Tech rally, August CPI, Fed dot plot: Market Takeaways

The technology sector (XLK) was the clear standout in Wednesday's trading session, where the tech-heavy Nasdaq Composite (^IXIC) surged by over 2.1% and the S&P 500 (^GSPC) climbed 1.07%.

Yahoo Finance markets reporter Josh Schafer analyzes tech sector gains following Nvidia (NVDA) CEO Jensen Huang's conference comments about the "intense" semiconductor demand, market reactions to August's Consumer Price Index (CPI), and what fresh data is indicating about the Federal Reserve's interest rate plans next week.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Luke Carberry Mogan.

Video transcript

S and P 500 NASDAQ surging in today's trade stocks, reversing those earlier losses.

As investors weigh the latest inflation data.

Yahoo Finance is Josh Schafer joins us now with the trading day takeaways, Josh, hey Josh, it was all about tech today in the stock market.

So let's take a closer look at this tech rally that we had.

I'm gonna start with the sector action and you can see tech was the only sector that outperformed the S and P 500 up in the up in the top left there.

XL K rising more than 3% outpacing the S and P 501% gain and really the only sector that just felt like it took off.

So you can see it took off really in the middle of the day here when we look at this intra day, this is right around when NVIDIA Ceo Jensen Wang was SP was speaking at a Goldman Sachs conference and you take a look at NVIDIA Stock itself which was up over 8% and it seems like what Wang had to say about demand.

Of course, he often talks about the fact that they have essentially more demand than they can meet, right?

But it seemed like maybe him coming out today might ease some investor concerns.

You and I have been talking a lot about, ok, what's the catalyst for these tech stocks right now that we're through earnings?

What's it gonna be that can help them?

It seems like Jensen coming out and speaking today and sort of speaking about the overall demand in that industry and where they sit if we for today helped NVIDIA and that helped the overall market.

Yeah, judge comes out and says demand for Blackwell is the latest and greatest current generation of chips.

He said, listen, strong demand, you know, and also, and so what did the S mh do today, Josh, did we see the pop there uh on the spot?

That's not fair.

We did talk to a strategist.

He said, listen, not to take anything away from Jensen Wong and what he said, but he said, looking at a lot of these names, of course, they've also been beaten up.

They were right for a absolutely.

I mean, you look, I pulled up semis for us here and if you look over the last 10 days, it had not been pretty for some of these stocks, you zoom out even further over the last two months.

It has not been pretty for some of these stocks.

So perhaps it makes sense for people to pile in a little bit there.

But the real story of the day that was driving the markets in the morning was the CP I print that we had right.

And sort of the takeaway from that being seems like we're going 25 basis points, not 50 in September.

That had been sort of the hot debate over the last month.

Right.

So what I up for us here, this is that CME fed watch tool that we talk about all the times and the percent chance that markets are pricing in, right?

For a 50% cut a month ago, it was 51%.

We were looking at 5050 split, then you get to 44% just last week after that last jobs report.

Then today you're down to 13%.

Economists are essentially reasoning that because core CP I increased 0.03% month over funds compared to the 0.2%.

We have been seeing not quite enough to convince the Fed that they should be overly confident in where inflation is headed to do 50 Bibs.

So it feels like maybe we're settled on this one at least for now.

It, it was interesting, Jack, because you saw the CP I print, you know, it hits and initially you saw that slide.

I don't know was that we were talking about this where that the pick up in the core index, whether at least late morning investors are sort of like, well, it's not gonna change whether they J Powell cuts next week.

But maybe this talk of a super size cut that was in the bloodstream that dimmed and we did slide.

But as you know, Tech L right.

And really what we were looking at too, at that point too, I'll go back to our sectors for a second and just point out some of the action that we saw throughout the day, you saw a little bit of recovery.

But overall, we were looking at a lot of interest rate sensitive sectors and those are still some of the ones that ended up finishing in the red here.

I'm looking at real estate.

Um, they were the laggards in the morning, they came back a little bit and I think part of that maybe has to do with part three here that we're gonna point out all eyes go to the dot Plot and whether or not we are going to get, this is where markets have thinking we're headed, right.

This is the last over the last month.

All those forecasts I've been talking about the destination is still for cuts.

But there's an underlying theory here, Eric Wallace over at your yardeni research highlighted this this morning to our morning show saying if the fed doesn't go 100 in 2024 maybe it's because things are good, right?

Maybe they don't go 100 because the economy is strong and maybe that's good for earnings and is actually a good backdrop.

I think we're gonna start hearing a little bit more of that rhetoric as we go toward next week and moving forward.

Is that Yardeni New Lieutenant?

That's a new name, new, new lieutenant and Ardennes gotten this new, another guy over there, one of the Yardeni team.

Thank you, Josh.

Appreciate it.