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Wall Street Extends Rally, Dollar Strengthens After Inflation Data

Wall Street and the dollar show positive signs on the final trading day of August, as inflation data aligns with expectations, reinforcing the possibility of the Federal Reserve pausing policy changes in the upcoming monetary policy meeting.

Wall Street sign
Wall Street sign

Continuous Gains in Major U.S. Stock Indexes

All three major U.S. stock indexes seemed set to continue their winning streaks, adding a fifth consecutive day of gains. Matthew Keator, managing partner at the Keator Group, noted that the recent pullback in August was a healthy and natural course of action, stabilizing markets from last year's turbulence. However, all three indexes remain on track to register losses for the month.

Anticipated Interest Rate Hike in Latter Part of the Year

The Commerce Department's Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation measure, met consensus, alleviating fears of an unexpected surge that could have triggered another interest rate hike in September. Keator added that recent benign inflation data and Federal Reserve Chair Jerome Powell's indication that the effects of past Fed actions will take time to materialize support the belief that any rate increase this year would occur later.

European Shares Strengthen After UBS and Credit Suisse Decision

European shares advanced, buoyed by financials after UBS decided to absorb Credit Suisse's domestic bank, and solidified gains after the PCE data release. The pan-European STOXX 600 index rose 0.20%, and MSCI's global stock gauge gained 0.12%.

Mixed Performance in Asian Markets and Emerging Stocks

Emerging market stocks declined 0.67%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.39% lower, while Japan's Nikkei rose 0.88%.

Dollar Index Rises Amid Cautious ECB Comments

The greenback gained against a basket of world currencies following U.S. economic data, while the euro declined after cautious remarks from a leading European Central Bank hawk. The dollar index rose 0.52%, with the euro down 0.75% to $1.0842.

Little Change in U.S. Treasury Yields After Data Release

U.S. Treasury yields remained relatively unchanged in volatile trading after data reinforced expectations that the Fed would maintain interest rates in September. The benchmark 10-year notes and the 30-year bond last rose in price, resulting in a yield decrease.

Increase in Oil Prices Due to U.S. Inventory Drawdown and OPEC+ Cuts

Oil prices surged, propelled by a U.S. inventory drawdown and production cuts by the OPEC+ group of oil-producing nations. U.S. crude rose 1.94% to $83.21 per barrel, and Brent was last at $86.81, up 1.11% on the day.

Gold Prices Remain Steady Following PCE Report

Gold prices were largely unchanged after the PCE report. Spot gold was essentially flat, at $1,941.89 an ounce.