Dow Jones Gains as Fed’s Favorite Inflation Gauge Cools
Stocks moved mixed Friday as investors welcomed an inflation report seen as crucial to the Federal Reserve’s next interest rate cut decision.
The S&P 500 (^GSPC) settled just above the flat line after posting a third record close this week. The Dow Jones Industrial Average (^DJI) gained 0.9%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.3%.
August’s reading of the Personal Consumption Expenditures (PCE) index, the Fed’s preferred measure of inflation, showed a continued slowdown in price pressures. The “core” PCE index, which is most closely watched by policymakers, rose 0.1% month over month, lower than Wall Street forecasts.
The PCE figure appears to increase bets on another giant rate cut from the Fed next month. More than half of traders – around 52% – now expect a 50 basis point cut.
Learn more: What the Fed Rate Cut Means for Bank Accounts, CDs, Loans and Credit Cards
Stock indicators are on track for weekly gains after market confidence in the economy returned. A strong GDP reading, combined with a continued slowdown in inflation, has reinforced the growing belief that the Fed can achieve a “soft landing” as it embarks on a rate-cutting campaign.
Elsewhere, China added to its flood of stimulus measures, boosting markets once again. Mainland stocks recorded their biggest weekly win since 2008, and luxury stocks are set for their best week in years as hopes for Chinese demand rise. Meanwhile, shares of Alibaba (BABA, 9988.HK), JD.com (JD, 9618.HK) and Meituan (3690.HK, MPNGY) surged amid the buying frenzy.
Among other individual stock moves, Costco (COST) stock fell in afternoon trading after the wholesale giant’s earnings disappointed Wall Street.
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