Stocks Rise as Federal Reserve’s Preferred Inflation Measure Softens

Stocks piled on gains Friday as investors embraced an inflation report seen as crucial to the Federal Reserve’s next decision on interest-rate cuts.

The S&P 500 (^GSPC) rose 0.1%, on the heels of ekeing out a third record-high close this week. The Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) gained around 0.2%.

The August reading of the Personal Consumption Expenditures (PCE) index, the inflation metric favored by the Fed, showed continued cooling in price pressures. The “core” PCE index, which is most closely watched by policymakers, rose 0.1% month over month, lower than Wall Street forecasts.

The PCE reading appeared to goose up bets on another jumbo-sized rate cut from the Fed next month. More than half of traders — around 52% — now expect a 50 basis point cut.

Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards

The stock gauges are on track for weekly wins as confidence in the economy returned to the market. A solid GDP reading, combined with continued cooling in inflation, has cemented growing conviction that the Fed can nail a “soft landing” as it embarks on a rate-cutting campaign.

Elsewhere, China added to its stream of stimulus measures, boosting markets once again. Mainland stocks scored their biggest weekly win since 2008, and luxury stocks are set 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) surged amid the buying spree.

In other individual stock moves, Costco (COST) stock slipped in morning trading after the wholesale giant’s revenue disappointed Wall Street.

Live2 updates

• Fri, September 27, 2024 at 6:30 AM PDT
  

  Intel stock edges up on news of CHIPS Act funding talks, reports of Arm offer

  Intel (INTC) stock rose nearly 1% in early trading Friday after a Financial Times report that the chip maker and the US government are on track to finalize $8.5 billion in CHIPS Act funding for the company by the end of the year. Intel shares jumped as much as 1.3% pre-market before paring gains.

  Separately, Bloomberg reported that Arm Holdings (ARM) expressed interest in buying Intel’s product business.

  The potential offer from Arm, the British chip designer with high-profile partners including Google (GOOG) and Apple (APPL), was rebuked by Intel, unnamed sources told Bloomberg.

  Intel has also reportedly been approached by Qualcomm (QCOM) and investment manager Apollo to buy the company in its entirety. Intel shares have climbed on the news over the past week, but are still down more than 50% from the beginning of the year.

  Rival Qualcomm floated a friendly takeover, according to the Wall Street Journal, but such a deal could face blowback from antitrust regulators. Analysts have also cast doubt on whether a Qualcomm takeover would make sense for Qualcomm or Intel financially.

• Fri, September 27, 2024 at 5:44 AM PDT
  

  Fed’s preferred inflation gauge shows prices increased less than Wall Street expected in August

  The latest reading of the Fed’s preferred inflation gauge showed prices increased at a slower pace than expected on a monthly basis in August.

  The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 0.1 % from the prior month during August, below Wall Street’s expectations for 0.2% and the 0.2% reading seen in July.

  Over the prior year, prices rose 2.7% in August, matching Wall Street’s expectations and coming in higher than 2.6% seen in July.

  Read more here.

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