Wall Street bounced back on Friday as megacap tech and chip stocks recovered from the week’s pummeling, while a largely in-line key inflation reading kept bets for an early start to interest-rate cuts alive.
Industrial conglomerate 3M jumped more than 17%, boosting the Dow, after the company raised the lower end of its annual adjusted profit forecast.
Chip stocks led the recovery in technology stocks, with the Philadelphia SE Semiconductor index on track to snap three sessions of losses as Nvidia, Intel, Broadcom and Qualcomm rose between 1.2% and 2.6%.
The so-called Magnificent Seven stocks were mixed in early trading, with Apple, Tesla and Alphabet slipping between 0.5% and 1.4%, while Microsoft , Meta Platforms and Amazon.com rose 0.4% to 2%.
The 10-year Treasury yield turned lower after the inflation figures were out.
Data showed the Personal Consumption Expenditures Price Index, the U.S. Federal Reserve’s preferred inflation metric, rose 0.1% on a monthly basis in June and 2.5% annually, both as expected, while personal income was lower than expected.
Megacaps buoy Wall St ahead of big tech earnings
The moderate rise in U.S. prices underscored an improving inflation environment, potentially positioning the Fed to start easing policy in September.
“You’ve got a pretty nice (inflation) report here that further emboldens the soft landing narrative,” said Rick Meckler, partner at Cherry Lane Investments.
Economically sensitive small-cap stocks rose, with the Russell 2000 jumping 1.7%, set for its third straight week of gains, if trends hold.
Bets of a 25-basis-point cut by the Fed’s September meeting held steady at around 88% after the data, according to CME’s FedWatch. Traders still largely expect two rate cuts by December, according to LSEG data.
At 9:51 a.m. ET, the Dow Jones Industrial Average was up 547.26 points, or 1.37%, at 40,482.33, the S&P 500 was up 43.42 points, or 0.80%, at 5,442.64, and the Nasdaq Composite was up 109.36 points, or 0.64%, at 17,291.08.
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