Dow, S&P 500 and Nasdaq fall as traders await key inflation knowledge

The US financial system stays in a powerful place, with new knowledge launched on Tuesday highlighting this power 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 yr has exceeded the enterprise cycle common, might sluggish in response to looser labor market situations, however we count on it to proceed to a strong tempo,” mentioned Nancy Vanden Houten, chief U.S. economist at Oxford Economics. » wrote in response to the info.

The economist mentioned the power 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 larger funding in mental property and analysis and improvement. “

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

Chris Rupkey, chief economist at FWDBONDS, added that larger productiveness traits might imply rates of interest are nearer to impartial than initially thought.

This knowledge “calls into query the restrictiveness of the Federal Reserve's rate of interest coverage,” Rupkey mentioned. “With productiveness knowledge 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 pattern doubtless gained't cease the Fed from chopping charges once more subsequent week, “however what number of fee cuts are wanted in 2025 stays an open query.”