US stocks climb higher after PCE data cements rate cut.
U.S. stocks rose Friday, extending gains after a key inflation reading largely cemented bets on an interest-rate cut at the Federal Reserve’s September meeting.
At 09:32 ET (13:32 GMT), the Dow Jones Industrial Average rose 75 points or 0.2%, the S&P 500 gained 26 points or 0.5%, and NASDAQ Composite climbed 135 points or 0.8%.
On the last trading day of August, the S&P 500 is on pace for a monthly gain of almost 1.3%, while the DJIA is on track to add 1.2%. The Nasdaq Composite is the sole loser of the three major averages, off by nearly 0.5% this month.
PCE points to rate cut
The Personal Consumption Expenditure index, the Fed’s preferred measure of inflation, rose 2.5% in July on an annual basis, compared with an estimate of 2.6%, according to economists polled by Reuters. On a monthly basis, it rose 0.2%.
Core PCE, which excludes volatile food and energy components, rose 2.6% last month on an annual basis, compared with expectations of 2.7%.
The reading defied expectations for a slight pick-up in inflation through the prior month.
Markets are still pricing in a rate cut in September, following a slew of dovish signals from Fed officials. Traders are pricing in a 68% chance for a 25 bps cut, and a 32% chance for a 50 bps cut, CME Fedwatch showed.
Gross domestic product data released on Thursday showed the U.S. economy grew more than initially estimated in the second quarter. Other data showed a slightly bigger-than-expected dip in jobless claims.
Dell lifts annual forecasts
In the corporate sector, Dell (NYSE: DELL) stock rose over 3% after the tech giant lifted its annual forecasts.
Ulta Beauty (NASDAQ: ULTA) stock fell 6% after it cut its annual sales and profit forecasts, hurt by slowing demand for higher-priced cosmetics and fragrances at its stores.
Lululemon Athletica (NASDAQ: LULU) gained 3% on better-than-expected earnings, even as the athletic apparel retailer cut its annual sales and profit forecasts, as demand slowed in North America amid selective consumer spending.
Intel (NASDAQ:INTC) stock rose over 5% after Bloomberg reported that the tech giant is considering splitting off its foundry business and scrapping plans for new factories, as it tries to weather a sharp slowdown.