Wall Street Today | Fed's Preferred Inflation Gauges Rise Modestly, Spending Jumps

The Federal Reserve's preferred measure of underlying inflation posted the smallest back-to-back increases since late 2020, encouraging a burst of consumer spending and feeding growing expectations that the economy can avert a recession.

The core personal consumption expenditures price index, which strips out the volatile food and energy components, rose 0.2% in July for a second month. The overall PCE price index also increased 0.2%, Bureau of Economic Analysis data showed Thursday.

Initial jobless claims fell by 4,000 to 228,000 in the week ended Aug. 26, the Labor Department said Thursday. It's the lowest level of claims since the week ended July 29.

Economists polled by The Wall Street Journal had estimated new claims would rise 5,000 to 230,000. Last week claims fell a revised 8,0000 to 232,000. That compared with the initial estimate of a decrease of 10,000 to 230,000.

Traders are abandoning the euro at pace as speculation grows the European Central Bank will struggle to tighten monetary policy further, even with inflation running far above target.

Data Thursday showed euro-area inflation stopped slowing in August and held above 5% — yet the market is betting the ECB's cycle of interest-rate hikes is as good as over. After a string of poor economic figures and comments from ECB member Isabel Schnabel on the dire outlook, traders are favoring a pause at the next meeting.

Oil rose for a sixth session, buoyed by risk-on sentiment and news that Russia had agreed on further OPEC+ cuts.

Although thin summer liquidity has kept the commodity tethered to broader markets, tightening physical supplies are supporting prices, with West Texas Intermediate posting a third monthly rise.

UBS said its net profit soared to $28.88 billion, up from $2.11 billion in the previous quarter. The profit was entirely driven by the $28.93 billion of negative goodwill from buying Credit Suisse for about $3 billion with the backing of the Swiss government.

The company turned in earnings of $2.68 a share, above estimates of $2.54. Sales of $2.2 billion rose 18% this quarter, topping expectations for $2.17 billion.

Lululemon believes it could continue to drive sales well throughout the fiscal year and raised its fiscal year guidance. It now expects net revenue to range between $9.51 billion to $9.57 billion. Diluted earnings per share are expected to be in the range of $12.02 to $12.17 for the year.

For the fiscal third quarter ended July 30, Broadcom reported revenue of $8.876 billion, up 5% from a year ago, just a smidgen above the Street consensus and the company’s own guidance at $8.85 billion. On an adjusted basis, Broadcom earned $10.54 a share in the quarter, a little above consensus at $10.43 a share.

Morgan Stanley analyst Keith Weiss lowered his call on Palantir to Underweight from Equal Weight, but raised his target for the stock price to $9 from $8.

Source: Bloomberg, Dow Jones, CNBC