On the last trading day of September, new U.S. economic data indicated that inflation had slowed down last month.

At the close on Wednesday, the S&P 500 index fell by 0.25%, giving back some of the gains seen earlier in the session, which saw it rise nearly 0.7% at one point. The Nasdaq index rose by 0.24%. The Dow Jones Industrial Average fell by 0.9%, or 441 points.

Data shows that in August, the Personal Consumption Expenditures Price Index ( PCE ) rose by 3.4% year-on-year, lower than the 3.7% of the previous month. Economists surveyed by Dow Jones had previously predicted that inflation would stabilize at 3.7%. What is more encouraging is that the core PCE , which excludes food and energy costs, rose by 3% year-on-year, lower than the 3.3% of the previous month and also below economists' expectations.

"Different performances among the 'Seven Sisters'"

In terms of the "Seven Sisters," Google rose by 1.01%, NVIDIA by 0.51%, Apple by 1.10%, Microsoft by 0.77%, Amazon by 1.01%, Tesla by 0.56%, and Meta Platforms fell by 1.84%.

Affected by data indicating a cooling of inflation, the yield on 10-year U.S. Treasury bonds fell from its highest level since 2007, currently at 5.23%. The yield on 30-year U.S. Treasury bonds also declined from its high since June 2002. Throughout September, high yields continued to pressure the stock market; as of Tuesday, the S&P 500 index had fallen by 0.2% for the month of September.

Rising borrowing costs have always been one of the issues that investors are most concerned about, as the yield on sovereign bonds serves as an important pricing benchmark in global markets. It is not only a crucial reference for investors when allocating to high-risk stocks but also serves as a benchmark for housing mortgages and corporate financing costs.

The head of institutional clients at Milan Banca Ifigest, Carlo Franchini, stated: "We have now reached a level of yield that is truly of significant importance. The temptation for investors to shift from stocks to bonds could become a problem."

However, Franchini indicates that he has not yet realized a profit from his stock investments. He believes that if the tensions around the Strait of Hormuz ease, leading to a decline in oil prices and a reduction in bond yield pressures, the stock market could still find support in October. He said, "In my opinion, it's better to continue being bullish."

Global bond yields remain high.

This week, the yields on 10-year government bonds in Germany and France rose to their highest levels in 17 and 18 years, respectively, with an expected increase of about 70 basis points and 120 basis points this quarter. In Japan, the yield on 10-year government bonds has hovered near its highest level in decades, with an expected cumulative increase of 38 basis points this quarter. Despite the significant rise in the cost of sovereign bond financing this quarter, global stock markets have generally shown strong resilience.

On Wednesday, market expectations for a Federal Reserve interest rate hike cooled down. The Federal Reserve monitoring tool from the CME group shows that traders' pricing indicates a 47% probability of a 25-basis-point rate hike by the Fed next month, down from 51% the previous day. Even though this round of inflation data is positive, traders still expect another rate hike in December.

Adam Hertz, Head of Global Multi-Asset Investments and Portfolio Manager at JLL Henderson, stated: "Although today's inflation data was better than expected, with strong employment and GDP data, this report is unlikely to change the market's general expectation that the Federal Reserve will raise interest rates again before the end of the year."

ADP Private sector employment data offset the benefits brought by inflation. ADP The report shows that 90,000 new jobs were created in September, exceeding economists' consensus forecast of 68,000.

Wednesday is not only the last day of September but also the closing day of the third quarter. There was a divergence in market performance at the monthly and quarterly levels. At the monthly level, the S&P 500 Index and the Dow Jones Industrial Average closed lower, while the Nasdaq Composite Index rose by more than 1%. At the quarterly level, both the S&P 500 Index and the Nasdaq Composite Index gained 2%, whereas the Dow Jones Industrial Average fell by nearly 2%.