Oracle stock surges on potential $20B Meta AI cloud deal
There will be ten Fed officials speaking next week, so we will get a better idea of future key interest rate cuts. In the meantime, Minneapolis Fed’s Neel Kashkari published an essay that said the labor market “appears to be weakening” and “nominal wage growth continues to moderate.” Kashkari also said that inflation remains high, but inflation expectations haven’t risen as expected. In conclusion, Kashkari said, “I do not believe we should be on a preset course for a series of rate cuts.” So, clearly, Kashkari is one of the Fed’s hawks.
One reason that the Fed might have only cut key interest rate 0.25% is that the Commerce Department on Tuesday reported that retail sales rose 0.6% in August, which was substantially higher than economists’ consensus estimate of a 0.3% increase. Excluding vehicle sales, retail sales rose an even more impressive 0.7% in August. Online sales surged 2% in August. Back-to-school sales apparently boosted clothing and accessories 1% in August, as well as sporting goods that rose 0.8%. Fully nine of the thirteen categories surveyed increased in August, which is a very good sign that consumer spending is healthy. July retail sales were also revised up to a 0.6% increase, up from 0.5% previously reported.
Wall Street was relieved on Thursday that new jobless claims declined to 231,000 in the last week, down from 264,000 in the previous week, which was the highest level for jobless claims in four years. Economists were expecting 240,000 new jobless claims, so this latest report was better than expected. Existing jobless claims remain high at 1.92 million, down just slightly from 1.93 million in the previous week.
It will be interesting to see exactly what President Trump announces today after his call with President Xi, other than the anticipated TikTok deal. The Financial Times reported that the Cyberspace Administration of China told companies, including ByteDance and Alibaba, this week to end their testing and orders of the RTX Pro 6000D, Nvidia’s tailor-made product for China. This is expected to be a leverage that President Xi can utilize to negotiate a better trade deal with the U.S.