On August 14, 2024, the US stock market saw a significant rise, buoyed by positive news about the changing prices of everyday items like clothes and food. The reported 2.9% increase, lower than expected, and a 3.2% rise when food and energy prices are excluded, aligns with expert predictions, instilling a sense of optimism in the market.

The day before, the stock market also increased because there was good news about how the prices of things that businesses buy, like raw materials, are changing. This is measured by the Producer Price Index, which showed a 2.2% increase.

This recent news may prompt key financial decision-makers, such as the Federal Reserve, to consider the possibility of reducing borrowing costs. Even those who are typically cautious about inflationary pressures are indicating potential support for this move, should more positive news emerge. With rising prices and job creation slowing, the likelihood of a rate cut at the September meeting is high.

While many experts are speculating that borrowing costs may decrease next month, with some predicting a significant drop and others a more modest reduction, it’s crucial to remember that these are just predictions. The financial landscape is always subject to change, and caution is advised when interpreting these forecasts.

On August 5, 2024, global stock markets dropped significantly amid worries about a potential recession, concerns about the Federal Reserve’s actions, and doubts about the impact of investments in artificial intelligence. These concerns were fueled by a slight rise in unemployment rates and the high risks of AI, which led to a 3% drop in the stock market index.

Additionally, the previous Friday, it was reported that the US economy added fewer jobs than expected in July, and the unemployment rate went up. Despite these fluctuations, the stock market remains at historically high levels. This is partly due to the fact that inflation continues to decrease, a sign that the economy is still strengthening under the Biden Administration. A stronger economy typically leads to higher stock prices and more job opportunities.

Citations:

Stock market today: Stocks rise as key inflation measure increases at slowest pace since 2021

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