Closing Recap

U.S. stocks surged to new all-time highs as a surprise spike in jobless claims overshadowed a slightly hotter-than-expected CPI report, cementing expectations for a Fed rate cut next week; Treasury yields fell below key levels and gold held near records, while the dollar was mixed. In the currency markets, the U.S. dollar saw mixed performance, losing ground against a resilient Euro but gaining against the Japanese Yen as U.S. rate cut expectations solidified, contrasting with a steady ECB and uncertain BOJ. 

Key Takeaways 

• New Record Highs: The S&P 500, Nasdaq, and Dow Jones Industrials all closed at new record highs in a broad-based rally. 
• Jobless Claims Spike Fuels Rally: A significant and unexpected jump in weekly jobless claims to their highest since October 2021 was the primary catalyst, boosting hopes for aggressive Fed easing. 
• Hotter CPI Digested: While the August CPI report came in slightly hotter than expected (+2.9% y/y), the market prioritized the weak labor market signal. 
• Rate Cut Bets Firm: Markets are now pricing in a 95% chance of a 25-basis-point Fed rate cut next week, with some odds of a larger 50-basis-point move. 
• Broad Gains, Small Caps Surge: The rally was widespread, with small caps (Russell 2000) jumping nearly 2% in a sign of strong risk appetite. 
• Forex market: Currency markets were mixed, with the EUR/USD holding firm near 1.1725 as the ECB kept rates steady, while the USD/JPY climbed towards 148.00 amid ongoing policy divergence. 
• Cryptocurrencies: Bitcoin prices rebounded, rising towards $115,000 as renewed Fed rate cut expectations provided support for risk assets. 
• Yields Fall, Gold Steady: Treasury yields fell, with the 10-year dropping below 4.10%, while gold prices pulled back slightly from recent all-time highs. 

Market Overview

U.S. equity markets soared to new all-time highs today, with investors decisively looking past a hotter-than-expected inflation report and focusing instead on a significant spike in weekly jobless claims that solidified expectations for a Federal Reserve rate cut next week. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all pushed into uncharted territory in a powerful, broad-based rally that saw small caps surge and market breadth improve significantly. 

Index	Up/Down	% Change	Last
DJ Industrials	616.87	0.0136	46107
S&P 500	55.41	0.0085	6587
Nasdaq	157.01	0.0072	22043
Russell 2000	43.51	0.0183	2421

The key catalyst for the day’s “risk-on” move was the weekly jobless claims data, which unexpectedly jumped to its highest level since October 2021. This report, seen as the most timely indicator of labor market health, overshadowed the August Consumer Price Index (CPI) report. While headline CPI ticked up to 2.9% year-over-year, the market appeared to prioritize the signs of a weakening jobs picture, a key factor for the Fed. Following the data, the probability of a 25-basis-point rate cut at the Fed’s September 16-17 meeting held firm above 94%. 

On the trade front, Commerce Secretary Howard Lutnick provided some positive commentary, suggesting deals with India and Switzerland are likely, and a “big deal” with Taiwan is coming. In central bank news, the European Central Bank (ECB) held its key interest rates steady as expected, with their updated projections showing a slight upward revision to 2025 growth. This contrasted with the dovish expectations for the Fed, which kept the U.S. market in the driver’s seat.

Economic Calendar

The U.S. economic calendar yesterday was dominated by a hotter CPI report being overshadowed by a significant spike in weekly jobless claims: 

• U.S. Consumer Price Index (CPI) (Aug): Headline CPI M/M: +0.4% (vs. +0.3% est.). 
• Headline CPI Y/Y: +2.9% (vs. +2.9% est., +2.7% prior). 
• Core CPI M/M (Ex-Food & Energy): +0.3% (In line with consensus). 
• Core CPI Y/Y (Ex-Food & Energy): +3.1% (In line with consensus). 
• Weekly Jobless Claims: Soared to 263K (Highest since Oct 2021, vs. 235K est., 236K prior). 
• European Central Bank (ECB) Rate Decision: Held key rates unchanged as expected. 

Key risk events today: 

• University of Michigan Consumer Sentiment (Sep – Prelim): Sentiment Index (est. 58.0, prior 58.2) 
• Expectations Index (est. 54.9, prior 55.9) 
• UoM 1-Year Inflation Expectations (prior 4.8%) 
• UoM 5-Year Inflation Expectations (prior 3.5%)

Commodities, Treasuries and Currencies 

Gold prices edged lower, with the December futures contract down $8.40 (-0.2%) to settle at $3,673.60 per ounce, in a bout of profit-taking after hitting recent all-time highs. Crude oil prices also fell, with WTI dropping $1.30 (-2.04%) to settle at $62.37/bbl. The decline was attributed to a bearish report from the International Energy Agency (IEA), which forecasted a potential oil surplus in 2026 and raised its 2025 supply growth estimates. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-1.3	USD/bbl	62.37
Brent	-1.12	USD/bbl	66.37
Gold	-8.4	USD/oz	3673.6
EUR/USD	0.0041	USD	1.1732
USD/JPY	-0.35	JPY	147.1
10-Year Note	-0.029	%	0.04

In the currency markets, the U.S. dollar saw mixed performance, weakening against a resilient Euro but gaining slightly against the Japanese Yen. The EUR/USD pair held firm near 1.1725, supported by the ECB’s steady policy stance and positive Eurozone manufacturing data. The GBP/USD pair was steady after UK GDP met estimates. The Australian dollar benefited from rising commodity prices. U.S. Treasury yields fell after the spike in jobless claims, with the 10-year yield dropping below 4.10% for the first time since early April before closing around 4.00%. Bitcoin prices rose, tracking the broader advance in risk assets amid the renewed rate cut hopes.

Looking Ahead 

With this week’s key U.S. inflation and labor market data now released, the market’s focus shifts squarely to next week’s highly anticipated Federal Open Market Committee (FOMC) meeting on September 16-17. The weak jobs data has all but guaranteed a 25-basis-point rate cut in the eyes of the market. Any deviation from that, or a particularly hawkish tone from Chair Powell, could spark significant volatility. The ongoing trade negotiations and any new tariff headlines also remain a background risk.Today’s preliminary University of Michigan Consumer Sentiment report will provide a final data point for the week.