U.S. stocks rose at the opening bell on Friday, ending a shaky week on a positive note as the latest reading in the Federal Reserve’s preferred inflation indicator boosted hopes for a rate cut.
The Dow Jones Industrial Average (^DJI) gained 0.5%, following Thursday’s record close, its third this week. The S&P 500 (^GSPC) rose about 0.2% and the tech-heavy Nasdaq Composite (^IXIC) jumped 0.8%.
Equity markets are optimistic heading into the end of the month, as fears of recession and the early August recession are behind them. The long-awaited Fed easing of monetary policy is also on the horizon.
Wall Street welcomed an update to the Personal Consumption Expenditures index, which showed prices rose in line with expectations in July. Core inflation — which excludes food and energy prices — rose 0.2% month-on-month, as expected. The annual rate came in at 2.6%, in line with June’s level and below the 2.7% forecast.
PCE inflation levels are closely watched by the Fed, and therefore closely watched by investors to calibrate the size and pace of rate cuts this year. After Chair Jerome Powell made it clear last week that a pivot could be expected in September, bets on a 0.5% cut have increased amid signs of strength in the economy. The steady level of price pressure in July kept a 0.25% drop in play.
Meanwhile, investors are backing off the Nvidia (NVDA) profit guard that has captivated markets this week. The S&P 500 and Nasdaq Composite are headed for weekly losses after choppy trading as tech companies struggled.
Chipmaker Intel (INTC) is considering spinning off its foundry and other assets as the Nvidia rival tries to stem losses. The stock rose 5% in morning trading.
Elsewhere in the tech sector, shares of Dell (DELL) rose 4% after the hardware maker raised its annual profit and revenue forecasts, thanks to demand for its Nvidia-powered AI servers.
