U.S. Stocks Surge Following Better-Than-Expected Monthly Inflation Data

U.S. stocks experienced an upward trend on Friday, marking the last trading day of the month and quarter, as positive monthly inflation data boosted investor sentiment.

By 11:12 ET (15:11 GMT), the Dow Jones Industrial Average had risen by 18 points, or 0.1%. The S&P 500 gained 0.4%, while the Nasdaq climbed by 0.9%.

On Thursday, the main indices on Wall Street closed in positive territory, with the tech-focused Nasdaq leading the pack with an increase of 0.8%. This uptick in stocks was supported by a decline in Treasury yields, which have recently reached 16-year highs.

As the month comes to a close, both the Nasdaq and the benchmark indices are likely to record their weakest performance so far this year, with the Dow Jones expected to show a decrease of about 3%.

Market attention has recently centered on the Federal Reserve’s potential interest rate adjustments, a surge in oil prices, and a budget impasse in Washington that risks triggering a government shutdown.

Focus on PCE Data

On the economic front, the August personal consumption expenditures (PCE) price index, which is the Federal Reserve’s preferred gauge of inflation, exceeded expectations on a monthly basis. The annual reading was recorded at 3.5%, with a 0.4% month-over-month increase. Core PCE, which excludes food and energy prices, reported an annual rate of 3.9% and a monthly increase of 0.1%, both slight declines from forecasts.

Economists had anticipated a slight acceleration in the headline PCE reading for August, which would indicate sustained upward pressure on prices within the economy.

Federal Reserve officials will be closely monitoring this metric as they evaluate the possibility of further interest rate hikes this year. Last week, the central bank maintained its interest rates in the 5.25% to 5.50% range but indicated the need for additional tightening during its November or December meetings to curb inflation.

Nike Surprises with Strong Earnings

In corporate news, shares of Nike Inc. surged by 6.1% following the release of strong fiscal first-quarter earnings that surpassed profit expectations, despite a revenue miss due to challenges in North America and a slowdown in China. The company’s earnings per share for the three-month period stood at 94 cents on revenues of $12.94 billion, while analysts had predicted earnings of 75 cents on sales of $13.02 billion. Analysts from Bernstein noted that Nike’s performance was a "nice beat," and the company upheld its fiscal year 2024 guidance.

Oil Prices on the Rise Amid Supply Concerns

Oil prices were up on Friday amidst fluctuating trading conditions, on track for a weekly increase of about 2%. This rise is attributed to tight supply conditions in the U.S. and optimism regarding increased demand in China during its upcoming Golden Week holiday.

In the latest quarter, oil prices have jumped by 30%, reaching their highest levels of the year, influenced by Saudi Arabia and Russia extending their production cuts through the end of the year. Additionally, U.S. storage levels at a key delivery point for crude futures are at their lowest since July 2022.

The anticipated high travel activity during the Golden Week holiday in China is expected to further drive demand in the world’s largest fuel importer. Analysts are also looking forward to an upcoming meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+), where reports suggest that Saudi Arabia may consider further voluntary supply cuts.