U.S. markets trade higher after softer PCE data, Cboe says

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US markets gain on PCE data

Highlights

Headline PCE rises 0.3% month-over-month and 3.4% year-over-year in August, below expectations, driving the Nasdaq up 0.48% and S&P 500 up 0.33%.
WTI crude climbs 2% to trade above $91 a barrel despite improved Strait of Hormuz tanker flows, as market risks persist.
Boeing gains nearly 1% on a $20 billion U.S. Navy contract, while Moderna drops 6.3% after an analyst downgrade citing unjustifiable valuation.

Inflation data and market reaction

As reported by Cboe Global Markets, all three major U.S. equity benchmarks move higher after the release of the Federal Reserve's preferred inflation gauge. The Nasdaq Composite advances 0.48% and the S&P 500 gains 0.33%, while the Dow Jones Industrial Average hovers near flat and appears at risk of ending its five-month streak of advances.

The personal consumption expenditures report shows inflation cooling modestly in August. Headline PCE rises 0.3% on the month and 3.4% year over year, below economists' expectations for 0.4% monthly growth and 3.7% annual growth, while core PCE, which excludes food and energy, increases 0.2% on the month and 3% on the year.

The reading matters for interest-rate expectations because the Federal Reserve uses the data closely in assessing inflation trends. Even with the softer print, inflation remains above the central bank's preferred 2% range.

Stocks, oil and product developments in focus

Oil prices also strengthen, with WTI crude up 2% and trading above $91 a barrel early in the session after finishing below $90 the previous day. That move comes despite analyst reports that tanker flows through the Strait of Hormuz are returning to near pre-war levels, although risks remain in the market.

Among individual stocks, Boeing shares rise nearly 1% after the aerospace company wins a U.S. Navy contract worth more than $20 billion for a next-generation fighter jet. Nvidia shares gain 1.5% as options activity intensifies around same-day expiry puts, while Tesla shares fall 1.65% amid heavy put interest around the 352.5 and 350 strikes.

Moderna drops 6.3% after an analyst downgrade that calls its valuation unjustifiable, though the stock remains up 156% year to date. Micron is due to report after the bell, with analysts focused on its quarterly revenue outlook; Bloomberg says one analyst describes the results as a key driver for the sector, and options markets imply a 6.5% move in either direction.

Cboe also says it is partnering with Robinhood to launch a new category of binary contracts linked to company-specific key performance indicators, with a rollout expected next month pending regulatory approval. Robinhood separately introduces Robinhood Agents, an artificial intelligence tool embedded in its app.

Our earlier coverage of Cboe’s planned KPI-linked binary contracts explained how the exchange aims to expand its prediction-market lineup with SEC-regulated instruments tied to company performance metrics and events. We noted that Robinhood is expected to be the first retail broker to offer the products at launch, pending regulatory approval, alongside Cboe’s related push to broaden its clearing capabilities for these new contracts.

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