Stocks churned at the end of a turbulent month, with traders interpreting mixed economic data and anticipating a key jobs report to gauge the outlook for Federal Reserve policy. Bond yields have fallen. The value of the dollar increased.
The S&P 500 finished with a minor loss on Thursday, marking its first monthly decline since February. Aside from profit-taking following this year's rally, traders cited the Fed's view that interest rates will remain higher for longer in order to prevent a flare-up in price pressures.
Back-to-back increases in the Fed's preferred measure of underlying inflation were the smallest since late 2020, encouraging consumer spending. According to Jeffrey Roach of LPL Financial, markets took the report in stride, with the numbers illustrating the divergence within the US economy.
Wall Street is now bracing for Friday's labor-market data, which will provide additional clues about the Fed's next steps. According to the report, employers increased their payrolls by nearly 170,000 in August, while the unemployment rate remained at a historic low of 3.5%.
