US close: Stocks jump, Arm surges in debut

US stocks finished with decent gains on Thursday on a busy day for economic data, a blockbuster flotation and an interest-rate hike across the Pond.

The Dow Jones Industrial Average finished up 1%, while the S&P 500 and Nasdaq both gained 0.8%.

Retail sales data, producer price inflation and jobless claims were on tap during the trading session, giving markets plenty to digest ahead of the Federal Reserve's policy meeting next week.

Retail sales rose by 0.6% in August after a downwardly revised 0.5% the month before, surprising economists who had expected a slowdown to 0.2% growth. The acceleration was mainly due to higher gas prices, which jumped 5.2% last month due to OPEC+ output cuts and supply chain issues in Libya.

Producer price inflation (PPI) also came in higher than expected, with price growth picking up to 0.7% in August, from a revised 0.4% gain in July and ahead of the 0.4% consensus forecast. This was the biggest rise since in 14 months. However, excluding volatile items like food and energy, inflation slowed to 0.2% from 0.4%.

The fact that energy prices were largely behind the pickup in retail sales and PPI figures will somewhat come as a relief for investors, since the Fed tends to focus on core inflation (which excludes volatile items like energy) in its economic outlook.

Meanwhile, initial weekly jobless claims rose to 220,000 during the week to 9 September, from 217,000 the previous week but slightly below the 225,000 estimate.

The US Dollar Index rose 0.6% to 105.34, while the yield on a 10-year US Treasury note rose 3.7 basis points to 4.296%, hitting a high of 4.304% earlier in the session.

In other news, the European Central Bank raised interest rates to a historical 4% with an increase of 25 basis points. The change aligned with analysts' expectations and represented the 10th hike in a series which started last July, but the ECB indicated that it would be the last hike in its current cycle of rate increases.

Arm steals the show

Arm shares finished 25% higher on the British chip designer's eagerly awaited debut on the Nasdaq. The stock, which was priced at $51, finished at $63.59, valuing the company at $65bn. The initial public offering, which was said to be 10 times oversubscribed, is the largest stock-market flotation since 2021.

Others in the tech sector like Apple, NVIDIA and Microsoft also rose.

Travel stocks were also in demand, with Norwegian Cruise Lines, Carnival and Booking Holdings putting in a decent performance.