4:15pm: Stocks end week on upbeat note
Wall Street ended a volatile week on a positive note, driven by optimistic inflation data and growing expectations of upcoming interest rate cuts.
The Dow Jones Industrial Average rose 1.6%, or over 650 points, while the S&P 500 and Nasdaq Composite gained 1.1% and 1%, respectively, though both were down for the week overall.
Despite recent losses in the Nasdaq and S&P 500 due to disappointing Big Tech earnings and a shift from large-cap to small-cap stocks, the recent economic data, including a slower-than-expected rise in the "core" Personal Consumption Expenditures (PCE) index, fueled hopes for a strong economy and a potential Fed rate cut.
Investors are also preparing for earnings reports from major tech companies, including Apple, Microsoft, Amazon, and Meta, which could impact market sentiment.
12:12pm: Rate cut hopes spur rally
US stocks rallied on Friday morning as June’s PCE report showing progress in reducing inflation boosted hopes of a September rate cut from the Federal Reserve.
Leading the gains was the Dow Jones, which added 1.9% or 757 points at 40,692 points.
The tech-laden Nasdaq, which has been particulary hard-hit by the recent sell-off, recovered 1.2% to 17,393 points and the S&P 500 was up 0.4% at 5,473 points.
Major movers included 3M Co (NYSE:MMM), which gained 19.6% on strong quarterly earnings and boosted profit guidance while medical device maker DexCom Inc (NASDAQ:DXCM, ETR:DC4) slumped more than 40% on a revenue miss and downwardly revised full year sales guidance.
10:30am: PCE report shows gradual inflation progress
The June PCE report showed incremental progress in reducing inflation, consistent with the Fed's expectations of a gradual decline, noted Bill Adams, chief economist for Comerica Bank.
Adams highlighted that while affluent Americans are supporting economic growth, low- and moderate-income households are feeling financial strain; the Fed is likely to signal a rate cut for September but will remain cautious, with cuts dependent on inflation trends and the job market.
"The Fed will see the June PCE report as consistent with their expectations that inflation is on a downward trajectory, but won’t go back to the 2% target overnight," Adams commented.
"Fed Chair Powell and other Fed policymakers have been repeating that they are looking for more good inflation data like recent releases to make them more confident that inflation is on a durable downtrend. This report looks pretty similar to the last few, and so the Fed will see it as adding to the evidence that inflation is slowing."
9:40am: Late-week recovery
US stocks are staging a late-week recovery after trading in the red for the better part.
The Dow Jones Industrial Average flew more than 400 points when markets opened, marking a 1.1% gain for the Wall Street benchmark.
The Nasdaq 100 also opened in high spirits with a 140-point (0.75%) add, while the broader S&P 500 rallied 41 points (0.8%).
On the macroeconomic calendar, the core PCE price index, the Federal Reserve’s preferred measure of underlying inflation, rose by 0.2% month on month in June,
This was a beat on market expectations of a 0.1% rise.
On an annual basis, core PCE inflation held steady at 2.6%, unchanged from the prior month.