The stock market had a mixed close on Wall Street as a highly anticipated report revealed a slight acceleration in inflation last month. The S&P 500 increased by 0.1% to 4,467.44 points. However, the Dow Jones Industrial Average fell by 0.2% to 34,575.53 points. On the other hand, the Nasdaq composite rose by 0.3% to 13,813.59 points. According to the report, US consumers experienced a 3.7% increase in prices compared to the same time last year, slightly higher than the July inflation rate of 3.2%.
This news may be discouraging for shoppers who are paying higher prices, but a significant portion of the inflation acceleration can be attributed to higher fuel costs which can change rapidly. Economists believe that underlying inflation trends still indicate a continued moderation. Inflation peaked at over 9% last year. Despite the slight increase in inflation, economists and investors do not expect it to significantly impact the Federal Reserve’s expected course of action. The forecast is still for the Fed to maintain steady interest rates at its upcoming meeting.
Airlines stocks struggled as they highlighted the impact of higher costs on their profitability. American Airlines revised its profit forecast for the summer due to unexpectedly high fuel costs. The company also had to pay $230 million in retroactive pay to pilots after a new labor contract was ratified. As a result, its stock fell by 5.7%. Spirit Airlines also faced higher fuel costs this summer, paying roughly $3.06 per gallon instead of the previously forecasted $2.80. Additionally, the airline experienced significant fare discounting during the past few weeks. Consequently, it lowered its revenue forecast for the third quarter, resulting in a 6.3% decrease in its stock price.
Other airlines also experienced declines, including United Airlines (-3.8%), Delta Airlines (-2.8%), and Southwest Airlines (-1.7%). On a positive note, high-growth stocks that stand to benefit from the Federal Reserve’s decision to halt interest rate hikes performed well. Rising interest rates negatively impact various investments, particularly technology companies and those with long-term growth prospects. Amazon showed strength, climbing by 2.6% and contributing to the upward movement of the S&P 500. Microsoft gained 1.3%, while Tesla saw a 1.4% increase. Moderna soared by 3.2% after positive results were reported from a flu vaccine trial.
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