PCE Came in Soft, and the Indexes Took Another Step Up

Right now the S&P 500 sits at 7,714.04, up 0.56%, and the Nasdaq at 27,054.82, up 0.96%. Against my last brief (22:40), the S&P 500 is 0.23%p higher and the Nasdaq 0.44%p higher. The index that was dawdling in place yesterday got a gentle shove overnight from a single number.

The inflation print that changed the mood

That number is US August PCE. Inflation came in at 3.4%, below forecasts, and the core PCE price index rose 0.2% month over month, also under expectations. Add the news that odds of an October rate hold jumped from 49% to 65%, and I read it as a layer of rate-hike worry peeling away, with the growth-heavy Nasdaq reacting most. By sector, biotech and biopharma are strong, while gold miners and fintech lag.

In Korea's last session the KOSPI fell 0.48% while the KOSDAQ gained 0.72% (9/30 close), and today's US tape looks more like the KOSDAQ's warmth than that split. Still, the won is at 1,359.56 per dollar (+0.37%) and the dollar index at 101.37 (+0.17%), so the dollar is climbing right alongside. It's not a carefree tape.

My disclosed holdings are quiet: Vertex Pharmaceuticals -0.6%, ConocoPhillips -0.9%, Coca-Cola -0.3%, Microsoft +31.0%. Those are just the recorded P&L, and I haven't touched anything because of today's move.

What I'm watching into the close

There are 4 hours 50 minutes left. First, whether the Nasdaq's +0.96%, helped by PCE, holds through the afternoon. Second, whether the dollar index and the won keep climbing, and whether talk of Treasury yield volatility comes creeping back. The market feels calm, but rate and credit strain are still lingering. The moments when the numbers look nicest are the ones I trust least.