US STOCKS-S&P 500 dips, Nasdaq higher on modest rise in inflation

Apple

30/09/2026 21:00

    * August PCE index cooler than expected
    * S&P 500, Nasdaq record second straight quarterly gains
    * Moderna falls after Citigroup downgrades to 'sell' 

    (Updates to market close)
    By Chuck Mikolajczak and Shashwat Chauhan
       NEW YORK, Sept 30 (Reuters) - Nasdaq climbed on
Wednesday and the S&P 500 dipped, with both indexes notching
their second straight quarterly gains, as a
softer-than-anticipated inflation reading cooled expectations
that Federal Reserve policy makers would hike rates in October. 
    The US Commerce Department reported the Personal Consumption
Expenditures Price Index (PCE) increased 3.4% on an annual basis
in August, below the 3.7% estimate of economists polled by
Reuters.
    Separately, the final reading of second-quarter GDP data was
revised higher to a 2.2% annualized rate, thanks to solid
consumer spending and investments helping to fuel the buildout
of AI infrastructure.  
    The rising prices of crude oil from the US-Iran war and
sky-high diesel fuel costs have stoked inflation worries and
pushed US Treasury yields higher. Fed officials have indicated
more rate hikes might be needed if price pressures fail to
moderate after the central bank raised interest rates by 25
basis points this month.
    The 2-year US Treasury note  US2YT=RR  yield, which
typically moves in step with Fed interest-rate expectations,
initially eased after the data before turning slightly higher,
while longer-dated yields kept climbing on expectations for
solid economic growth. 
    Market expectations for a rate hike of at least 25 basis
points at the Fed's October meeting slumped to about 39%,
according to CME's FedWatch Tool, from roughly 51% in the prior
session and nearly 71% a week ago.
    Analysts also noted that recent methodology changes in
calculating PCE by the Bureau of Economic Analysis contributed
to a lower reading. 
    "What the market is focused on is, is the economy continuing
to grow and can it manage those higher interest rates? And I
would say so far, the market has looked kind of like history
that when the economy is growing, when profits are strong, when
there's a secular theme, it will look past higher interest
rates," said Anthony Saglimbene, chief market strategist at
Ameriprise Financial in Troy, Michigan. 
    "However... if these higher rates stay at these elevated
levels for longer, it's likely to start doing potentially more
damage to the bond side of the portfolio, it could limit credit
or available credit. And if investors start to feel those
conditions could weigh on economic growth or weigh on corporate
profitability over the next quarter or two, then I think you
would see a very swift negative reaction in the market."
     
    S&P, NASDAQ NOTCH QUARTERLY GAINS
    According to preliminary data, the S&P 500  .SPX  lost 18.13
points, or 0.23%, to end at 7,652.71 points, while the Nasdaq
Composite  .IXIC  gained 66.46 points, or 0.25%, to 26,864.00.
The Dow Jones Industrial Average  .DJI  fell 431.84 points, or
0.84%, to 50,918.08.
    Both the S&P 500 and Nasdaq recorded their second straight
quarterly advances and fifth in the past six. The Dow saw a
quarterly decline for the second time in three. 
    Most megacap and growth stocks ticked higher, with
Amazon.com  AMZN.O  and Apple  AAPL.O  and Nvidia  NVDA.O  each
rising and in turn lifting the S&P 500 tech  .SPLRCT  index as
the best-performing sector on the day. 
     
    PRIVATE PAYROLLS RISE IN SEPTEMBER 
    A reading on the labor market showed private employment rose
by 90,000 jobs this month after a downwardly revised 36,000 in
August, the ADP National Employment Report showed. The data was
the latest in a string of reports on the job market this week
that will culminate in Friday's key government payrolls report. 
     
    Without addressing the softer-than-expected inflation data,
Fed Governor Lisa Cook said she is committed to bringing
inflation down without harming the labor market as price
pressures have been too high for too long.  
    Among other movers, Hewlett Packard Enterprise  HPE.N 
climbed after the AI server maker raised its long-term revenue
growth forecast for its networking business and announced a $1.2
billion deal with Vultr. 
    Moderna  MRNA.O  slumped after brokerage Citigroup
downgraded its rating on the biotech company to "sell" from
"neutral." 

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    Inflation gauges    https://www.reuters.com/graphics/USA-STOCKS/gdpzgdzakvw/inflation.png
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    (Reporting by Chuck Mikolajczak; additional reporting by
Shashwat Chauhan and Tharuniyaa Lakshmi in Bengaluru; Editing by
Devika Syamnath and David Gregorio)
 ((charles.mikolajczak@tr.com; @chuckmik.bsky.social))