Dow, S&P 500 and Nasdaq fall as buyers await key inflation information

The US financial system stays in a robust place, with new information launched on Tuesday highlighting this energy within the face of excessive rates of interest.

Productiveness development within the third quarter was unchanged at a wholesome 2.2% on a sequential foundation, whereas the year-on-year fee remained unchanged at 2.0%.

“Productiveness development, which over the previous 12 months has exceeded the enterprise cycle common, might gradual in response to looser labor market situations, however we count on it to proceed to a stable tempo,” mentioned Nancy Vanden Houten, chief U.S. economist at Oxford Economics. » wrote in response to the information.

The economist mentioned the energy in productiveness is “partly a response to tight labor market situations lately” however that there have additionally been structural adjustments, together with “an increase in enterprise dynamism and higher funding in mental property and analysis and growth. “

“Consequently, we imagine that development development within the U.S. financial system is at present above 2%,” Houten mentioned.

Chris Rupkey, chief economist at FWDBONDS, added that increased productiveness tendencies may imply rates of interest are nearer to impartial than initially thought.

This information “calls into query the restrictiveness of the Federal Reserve's rate of interest coverage,” Rupkey mentioned. “With productiveness information like this in hand, Fed hawks can argue that rates of interest are nearer to impartial than the committee thought.”

The economist mentioned the sturdy development probably received't cease the Fed from slicing charges once more subsequent week, “however what number of fee cuts are wanted in 2025 stays an open query.”