Headlines on trade continue to dominate the markets. Equites opened higher after President Trump’s chief economic adviser, Larry Kudlow, confirmed a report that the U.S. had proposed a new round of trade talks. The market then ran out of steam after President Trump tweeted that the U.S. is not under pressure to make a deal with China. The Dow found support at a previous resistance zone (26,070) and has bounced nicely back toward the highs of the day.        

CPI

Consumer prices rose less than expected in August. According to the Labor Department, the Consumer Price Index rose 0.2%, economists were expecting a 0.3% rise.  Declines in apparel (-1.6%) and health care (-0.2%) were offset by gas (+3.0%) and rent prices (+0.3%).  Core CPI, ex-food and energy, increased 1%, which was below consensus of +0.2%. When coupled with yesterday’s Producer Price Index decline, it appears that inflation pressures are easing. The U.S. dollar sold off, treasury yields declined, and equity futures rose as concerns the Fed will need to raise rates to combat inflation subsided, for now. 

Initial and Continuing Claims

For the week ended September 8, initial jobless claims declined 1,000 to 204,000, which was better than the 210,000 consensus. The four-week moving average decreased by 2,000 to 208,000. Continuing claims ending September 1 decreased by 15,000 to 1.696 million. Both reports continue to trend lower, with the four-week moving average for initial claims at the lowest level since 1969, and continuing claims at the lowest level since 1973. Strong hiring needs and record job openings were contributing factors. 

Technology is showing strength with the beaten down semiconductor group leading the way.  Chip stock are among winners in that space. Retail and energy are lagging. Crude oil is trading down 2.36% @$68.72 as Hurricane Florence is downgraded to a Category 2.

Breadth: Bullish

• NYSE advances 1,792 to declines 1,149; new 52-week highs 119 to new lows 73
• Nasdaq advances 1,668 to declines 1,269; new 52-week highs 129 to new lows 50.