Stocks opened higher Thursday following the latest inflation data and built on those gains as the session wore on. Investor sentiment also got a lift from Arm Holdings’ (ARM) initial public offering (IPO), with the chipmaker sizzling on its first day of trading.
This morning’s producer price index (PPI), which measures what businesses are charging suppliers for goods, painted a similar picture to yesterday’s Consumer Price Index (CPI). Specifically, the Bureau of Labor Statistics said earlier the August PPI rose 0.7% month-over-month, faster than July’s 0.4% increase, as gas prices spiked. Core PPI, which excludes volatile food and energy prices, was unchanged from the month prior, but rose at a quicker annual pace (3.0% vs July’s 2.9%).
Also on the economic calendar was initial jobless claims, which edged up by a modest 3,000 last week to 220,000. Additionally, retail sales increased for a fifth straight month in August due to higher sales at gas stations.
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None of these data points does much to move the needle on expectations the Federal Reserve will pause rate hikes at next week’s meeting. Indeed, futures traders are pricing in a 97% chance the central bank will keep interest rates unchanged at next week’s meeting, according to CME Group.
Arm IPO comes in hotThe day’s headlines did not solely revolve around the economy and interest rates, however. Another major news story was Arm’s blockbuster IPO. The Softbank-owned chipmaker that was previously a Nvidia (NVDA, +0.2%) takeover target last night priced its IPO at $51 per share – the high end of its range – and opened today at $56.10. Shares reached $66.28 in intraday trading before settling at $63.59.
“The ARM IPO is the most hyped listing we’ve had in the markets for a while, with rising rates and volatility in equity markets dampening new listings over the past two years,” says Kyle Rodda, senior market analyst at brokerage firm at Capital.com.
But not everyone is as excited as investors about the Arm IPO. David Trainer, CEO New Constructs, a research firm powered by artificial intelligence, says this offering creates “a valuation that is completely disconnected from the company’s fundamentals.” As such, there’s likely “very limited upside ahead” for ARM.
Elsewhere, HP (HPQ) slumped 1.8% after a regulatory filing revealed Warren Buffett’s Berkshire Hathaway (BRK.B, +0.5%) sold 5.5 million shares of the PC and printer maker. Buffett & Co. initiated a stake in HPQ in the first quarter of 2022 and owned 120.9 million shares at the end of Q2 2023, representing 1.1% of the Berkshire Hathaway equity portfolio.
As for the major indexes, the Nasdaq Composite rose 0.8% to 13,926, the S&P 500 gained 0.8% to 4,505, and the Dow Jones Industrial Average added 1.0% to 34,907.
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