"Mid-cap and small-cap indexes outperformed, while the technology-heavy Nasdaq slipped as investors took profits from this year's strong run in artificial intelligence-related stocks. The Fed remains the central focus. Powell acknowledged that inflation remains a challenge but also highlighted weakening signs in the labor market. He noted that interest rates are currently at restrictive levels, and the balance of risks may be shifting toward employment. His comments raised expectations that the Fed could begin lowering rates soon."
"Economic data reinforced the mixed outlook. The August flash Purchasing Managers' Index (PMI) reached 55.4, its strongest level this year, signaling continued expansion. Manufacturing in particular surprised to the upside, hitting a 39-month high. However, companies reported higher input costs, largely due to tariffs, and passed those on to customers. Jobless claims also rose more than expected, suggesting that the labor market is beginning to cool."
Global markets refocused on central banks as signals suggested possible U.S. rate cuts. U.S. equities finished mixed; mid- and small-caps outperformed while the Nasdaq slipped amid profit-taking in AI-related stocks. The Fed noted persistent inflation but weakening labor market indicators, and interest rates were described as restrictive, shifting risks toward employment and increasing rate-cut expectations. Economic data showed a strong August flash PMI at 55.4 and a 39-month high in manufacturing, but rising input costs and higher jobless claims suggested cooling labor conditions. Europe gained on U.S. optimism while Japan and China showed divergent trends.
Read at London Business News | Londonlovesbusiness.com
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