U.S. stocks climbed at the open on Friday, poised to end a volatile week on a positive note as the latest reading of the Federal Reserve’s preferred inflation gauge boosted rate cut hopes.
The Dow Jones Industrial Average (DJI) gained 0.5%, after hitting its third record closing high this week on Thursday. The S&P 500 (GSPC) jumped about 0.2% and the tech-heavy Nasdaq Composite (IXIC) jumped 0.8%.
Stocks are showing an upbeat tone at month-end, with recession fears and the early August rout behind us, and the long-awaited start of Fed easing on the horizon.
Wall Street welcomed the updated personal consumption expenditures index, which showed that prices rose in July in line with expectations. “Core” inflation, which excludes food and energy prices, rose 0.2% month-on-month, as expected. The annual rate came in at 2.6%, unchanged from June and below the 2.7% forecast.
PCE inflation levels are closely monitored by the Fed, and thus closely watched by investors to calibrate the size and pace of rate cuts this year. After Chair Jerome Powell made clear last week that a pivot was expected in September, bets on a 0.5% rate cut intensified on signs of strength in the economy. The steady level of price pressures in July kept a 0.25% rate cut in play.
Meanwhile, investors are moving away from the Nvidia (NVDA) earnings watch that has kept markets on edge this week. The S&P 500 and Nasdaq Composite are on track for weekly losses after choppy trading as technology stocks struggled.
Chipmaker Intel (INTC) is considering spinning off its foundry and other options to try to contain losses. Its stock gained 5% in morning trading.
Elsewhere in the tech sector, Dell (DELL) shares jumped 4% after the hardware maker raised its full-year profit and revenue forecast, boosted by demand for its Nvidia-powered AI servers.
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