European Investor
03 Sep 2026, 14:17
U.S. Stocks Rise as Strong Services Activity and Lower Treasury Yields Offset Inflation Concerns
U.S. stocks traded higher Thursday as investors weighed stronger-than-expected services activity against signs of a cooling labor market and renewed inflation pressure from rising oil prices. The S&P 500 gained 0.37% to 7,694.65, the Dow Jones Industrial Average rose 0.46% to 53,304.90, and the Nasdaq Composite advanced 0.66% to 26,391.59.
Economic data painted a mixed but generally resilient picture. Initial jobless claims increased slightly to 206,000 from 204,000, marginally above the 205,000 consensus, while continuing claims climbed to 1.779 million from 1.771 million. The figures suggest layoffs remain relatively limited even as hiring momentum has weakened ahead of Friday’s closely watched August employment report.
Services activity was considerably stronger. The ISM Non-Manufacturing PMI rose to 55.4 in August from 54.1, comfortably beating expectations for an unchanged 54.1 reading. S&P Global’s Services PMI also increased to 56.5 from 54.6, although it came slightly below the 56.8 forecast. Together, the readings indicate that the dominant U.S. services sector continues to expand at a healthy pace.
The inflation component, however, complicated the outlook for the Federal Reserve. ISM services prices jumped to 72.6 from 70.3, well above the 70.0 forecast, signaling persistent input-cost pressures. Investors are already sensitive to inflation after Fed Chair Kevin Warsh’s hawkish Jackson Hole message increased expectations that monetary policy may need to remain restrictive.
Oil remains another major inflation risk. Brent crude climbed to around $97 a barrel and WTI moved above $93 as renewed U.S. strikes on Iran and threats of further escalation raised concerns about supplies through the Strait of Hormuz.
Despite those risks, declining Treasury yields are currently providing support to equities, particularly technology stocks, helping the Nasdaq outperform. Markets now turn to Friday’s U.S. employment report, which could determine whether investors focus more heavily on slowing labor demand or the increasingly visible inflation pressures coming from services and energy markets.
U.S. stocks traded higher Thursday as investors weighed stronger-than-expected services activity against signs of a cooling labor market and renewed inflation pressure from rising oil prices. The S&P 500 gained 0.37% to 7,694.65, the Dow Jones Industrial Average rose 0.46% to 53,304.90, and the Nasdaq Composite advanced 0.66% to 26,391.59.
Economic data painted a mixed but generally resilient picture. Initial jobless claims increased slightly to 206,000 from 204,000, marginally above the 205,000 consensus, while continuing claims climbed to 1.779 million from 1.771 million. The figures suggest layoffs remain relatively limited even as hiring momentum has weakened ahead of Friday’s closely watched August employment report.
Services activity was considerably stronger. The ISM Non-Manufacturing PMI rose to 55.4 in August from 54.1, comfortably beating expectations for an unchanged 54.1 reading. S&P Global’s Services PMI also increased to 56.5 from 54.6, although it came slightly below the 56.8 forecast. Together, the readings indicate that the dominant U.S. services sector continues to expand at a healthy pace.
The inflation component, however, complicated the outlook for the Federal Reserve. ISM services prices jumped to 72.6 from 70.3, well above the 70.0 forecast, signaling persistent input-cost pressures. Investors are already sensitive to inflation after Fed Chair Kevin Warsh’s hawkish Jackson Hole message increased expectations that monetary policy may need to remain restrictive.
Oil remains another major inflation risk. Brent crude climbed to around $97 a barrel and WTI moved above $93 as renewed U.S. strikes on Iran and threats of further escalation raised concerns about supplies through the Strait of Hormuz.
Despite those risks, declining Treasury yields are currently providing support to equities, particularly technology stocks, helping the Nasdaq outperform. Markets now turn to Friday’s U.S. employment report, which could determine whether investors focus more heavily on slowing labor demand or the increasingly visible inflation pressures coming from services and energy markets.
