Stocks piled on gains on Friday as investors welcomed an inflation report seen as crucial to the Federal Reserve’s upcoming decision on interest rate cuts.
The S&P 500 (^GSPC) rose 0.1% after notching a third record close this week. The Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) gained about 0.2%.
The August reading of the Personal Consumption Expenditure (PCE) index, the inflation metric favored by the Federal Reserve, showed a continued cooling of price pressures. The “core” PCE index, which is more closely watched by policymakers, rose 0.1% month over month, missing Wall Street forecasts.
The PCE reading appeared to raise bets on another huge rate cut by the Federal Reserve next month. More than half of traders (around 52%) now expect a 50 basis point cut.
Read more: What the Federal Reserve’s rate cut means for bank accounts, CDs, loans and credit cards
Stock indicators are on track for weekly gains after confidence in the economy returned to the market. A strong GDP reading, combined with a continued cooling of inflation, has cemented growing conviction that the Federal Reserve can achieve a “soft landing” as it embarks on a rate-cutting campaign.
Elsewhere, China added to its series of stimulus measures, once again boosting markets. Mainland stocks notched their biggest weekly gain since 2008, and luxury stocks are heading for their best week in years as hopes for Chinese demand rise. Meanwhile, shares of Alibaba (BABA, 9988.HK), JD.com (JD, 9618.HK) and Meituan (3690.HK, MPNGY) rose amid the buying spree.
In other individual stock moves, Costco (COST) stock fell in morning trading after the wholesale giant’s revenue disappointed Wall Street.
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