Dow, S&P 500 hunt for fresh highs after inflation cools further; Nasdaq wobbles
Major U.S. stock indices rose on Friday, with the S&P 500 and Dow nearing record highs after a cooling inflation report. The August Core PCE index showed a 0.1% increase month-over-month, below expectations. The Michigan Consumer Sentiment Index rose to 70.1, indicating consumer awareness of slowing inflation. Jamie Cox from Harris Financial Group noted that the focus has shifted from inflation to economic spending, suggesting a potential 50 basis point rate cut by the Fed in November. Treasury yields fell slightly, with the 10-year at 3.77% and the 2-year at 3.61%.
Major U.S. stock market averages were mostly higher Friday, with new record highs in sight after the Federal Reserve's preferred inflation measure cooled further in August.
Investors were wrapping up with week the August Core PCE report, and the Michigan Consumer Sentiment Index edging up to 70.1 at the end of September. Consumers "are fully aware that inflation has continued to slow," Surveys of Consumers Director Joanne Hsu said.
The S&P 500 (SP500) +0.2%, and the Dow (DJI) +0.7%, in position for new record closing highs. The Nasdaq Composite (COMP:IND) was higher then moved down less than +0.1%. Ten of the 11 sectors on the S&P 500 (SP500) rose, led by Energy. Information Technology was -0.6%.
"Inflation is no longer the story in the PCE data for the Fed. It’s now all about spending and keeping the economy strong," Jamie Cox, managing partner at Harris Financial Group, said in a note.
"If you were second guessing the Fed going .50 in September, you aren’t now. These data suggest another .50 in November is likely," Cox said, referring to the Fed's big rate cut this month of 50 basis points this month.
In the fixed-income market, the 10-year Treasury yield (US10Y) was down 2 basis points to 3.77%. The 2-year yield (US2Y) was down 3 basis points to 3.61%.
August Core PCE Price Index came in at +0.1% M/M vs +0.2% expected and +0.2% prior, and +2.7% Y/Y vs. +2.7% expected and +2.6% prior.
Also Friday, wholesale inventories rose 0.2% in August, matching consensus, and retail inventories were up 0.5% in the same month.
Major U.S. equity averages finished higher Thursday, buoyed in part by confirmation of a strong quarterly U.S. economic growth rate. The Commerce Department said the Q2 GDP growth estimate remained at 3% in its final print, matching expectations.