US stocks edged higher on Friday after the release of closely watched inflation data that met expectations and reinforced bets on further interest rate cuts from the Federal Reserve.
The S&P 500 rose 0.2%, the Nasdaq Composite gained slightly, and the Dow Jones Industrial Average advanced 190 points, or 0.4%.
The personal consumption expenditures price index for August showed core inflation at 2.9% on an annual basis and 0.2% monthly, while the headline measure came in at 2.7% year-on-year and 0.3% for the month.
Markets continue to price in two quarter-point cuts at the Fed’s upcoming meetings, consistent with policymakers’ own projections.
The release followed Thursday’s stronger-than-expected jobless claims and an upward revision of second-quarter GDP to 3.8%, which tempered expectations for aggressive easing.
Some investors fear that resilient growth and a firm labour market could reduce the urgency for additional rate cuts.
The data came after three straight sessions of market declines, led by continued weakness in Oracle and other AI-linked names, as doubts over the sustainability of the sector weighed on sentiment.
For the week, the S&P 500 was down nearly 0.9%, the Nasdaq lost about 1.1%, and the Dow slipped 0.8%.
Oracle shares have fallen 5.6% over the same period.
Trade policy also moved into focus after President Donald Trump said he would impose a 100% tariff on “any branded or patented Pharmaceutical Product,” exempting companies with US-based manufacturing plants.
He also announced a 25% levy on imported heavy trucks effective October 1. Shares of truckmaker Paccar rose 5% in early trading following the comments.
BMO Capital has lifted its year-end target for the S&P 500 to 7,000, aligning its forecast with what it had previously described as its bull-case scenario.
The firm said the revision reflects both the strength of the ongoing rally and the resilience of the US equity market.
Core inflation steady
Core inflation held steady in August, reinforcing expectations that the Federal Reserve will continue with planned interest rate cuts.
The Commerce Department reported Friday that the personal consumption expenditures price index rose 0.3% for the month, putting the annual headline rate at 2.7%.
Excluding food and energy, the core measure increased 0.2% on the month and 2.9% from a year earlier.
The headline figure ticked up from 2.6% in July, while the core rate was unchanged.
All readings matched consensus forecasts. Meanwhile, spending and income came in slightly stronger than anticipated: personal income rose 0.4% and personal consumption expenditures climbed 0.6%, each 0.1 percentage point above estimates.
While the Fed’s inflation target remains at 2%, the latest data are unlikely to alter the policy outlook.
Officials signalled last week that they expect two more quarter-point rate cuts before year-end.
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