US stocks rose broadly on Friday after an in-line inflation report strengthened hopes for interest rate cuts in September, though Nike shares slumped after a dismal annual sales forecast.
The Commerce Department’s data showed personal consumption expenditures (PCE) price index – the Fed’s preferred inflation gauge – was unchanged on a monthly basis in May and rose 2.6% annually, all along expectations.
Excluding the volatile food and energy components, the core figure increased 0.1% month-on-month and 2.6% annually.
Chances of a rate cut in September inched up to 68% from 61% before the data, as per LSEG FedWatch data.
“This is a perfect report – it gives the Fed the green light to cut in September, and sets the stage for the dovish rhetoric to continue,” said Jay Woods, chief global strategist at Freedom Capital Markets.
Traders held their bets of two cuts despite Fed projections of just one this year, hoping for a sustained downtrend in inflation and as the economy remains susceptible to decades-high interest rate.
Wall St listless as eyes on crucial inflation data
Megacaps including Apple, Nvidia, and Amazon.com rose between 0.2% and 1.2%.
Most of the S&P 500 subsectors were higher, led by tech stocks. The small-cap Russell 2000 rose 0.8% to an over two week-high.
However, Nike slumped 17.1% after forecasting a surprise drop in fiscal 2025 revenue, weighing on the broader consumer discretionary sector.
At 9:43 a.m. ET, the Dow Jones Industrial Average was up 133.28 points, or 0.34%, at 39,297.34, the S&P 500 was up 16.64 points, or 0.30%, at 5,499.51, and the Nasdaq Composite was up 42.09 points, or 0.24%, at 17,900.77.
Richmond Fed President Thomas Barkin said he still wanted to proceed “deliberately” on policy and the Fed’s Mary Daly said the latest data was “good news that policy is working.”
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