US Stocks Surge on Inflation Data
US stocks opened higher on Friday, with a strong push towards ending the week on a positive note, as the Federal Reserve’s preferred inflation gauge data offered investors a glimmer of hope for upcoming rate cuts.
Indexes Show Gains After Inflation Data Release
The Dow Jones Industrial Average (DJI) gained 0.5%, advancing from its record close on Thursday. This marked its third record close of the week. The S&P 500 (GSPC) also climbed, gaining roughly 0.2%, while the tech-heavy Nasdaq Composite (IXIC) jumped 0.8%.
Stocks are showing strength as the month comes to a close. Earlier concerns about a recession and the sell-off in early August are now fading into the background. Market sentiment is shifting, with expectations of Federal Reserve easing in the near future.
US Stocks’ Market – Inflation Data Aligns with Expectations
Wall Street reacted positively to the latest update on the Personal Consumption Expenditures (PCE) index. This index, which is closely watched by the Fed, showed that prices increased as expected in July. Core inflation, which excludes volatile food and energy prices, rose 0.2% month-on-month. This rise was in line with expectations.
The annual core inflation rate remained steady at 2.6%, matching June’s level and slightly below the forecast of 2.7%. These figures suggest that inflation pressures are easing, which could support the case for rate cuts.
Rate Cut Bets Increase
The steady inflation data has prompted investors to recalibrate their expectations for future rate cuts. Federal Reserve Chair Jerome Powell recently indicated a possible pivot in September. As a result, bets on a 0.5% rate cut have increased. However, the July inflation data suggests a more modest 0.25% rate cut remains a possibility.
Tech Stocks React to Earnings and News
Meanwhile, investors are moving past the intense focus on Nvidia’s (NVDA) earnings, which had dominated market attention earlier in the week. Despite the upbeat inflation data, the S&P 500 and Nasdaq Composite remain on track for weekly losses, following a period of volatile trading driven by struggles in the tech sector.
Chipmaker Intel (INTC) is exploring strategic options, including the potential spinoff of its foundry business.
The company is seeking ways to counter losses and better compete with rivals like Nvidia. Intel’s stock responded positively to the news, gaining 5% in morning trading.
Dell Boosts Forecasts Amid AI Demand
Elsewhere in the tech sector, Dell Technologies (DELL) saw its shares rise by 4%.
The hardware maker raised its annual profit and revenue forecasts, thanks to strong demand for its Nvidia-powered AI servers. This move reflects broader optimism about the tech sector’s prospects, despite recent volatility.
As the week comes to a close, Wall Street is buoyed by inflation data that aligns with expectations. Investors are increasingly hopeful that the Federal Reserve will begin easing rates soon. With tech stocks rebounding and positive earnings reports, the market is looking to end the week on a high note.
Chart by Trading View
