Stock moved higher in early trading Friday after a closely watched inflation report reinforced expectations that the Federal Reserve will continue cutting interest rates.
The Dow Jones Industrial Average was up 0.8% at a new record high, while the S&P 500 rose 0.3% and the Nasdaq Composite was up fractionally. The major indexes finished higher Thursday, with the S&P 500 posting a record closing high, boosted by a rally for chip stocks and big gains for companies with exposure to the Chinese economy amid news of stimulus measures.
The U.S. stock market has recovered from an early-September selloff as investors are optimistic that the economy is headed for a soft landing and that the Fed will continue cutting interest rates, after it reduced the influential fed funds rate last week for the first time in four years.
The Personal Consumption Expenditures index, which is the Fed’s preferred measure of inflation, showed that annual inflation fell to 2.2% in August. That was down from 2.5% the month before and slightly lower than economists had expected. It also puts inflation closer to the Fed’s 2% annual target, which is watching the data closely as it tries to ensure that rate cuts don’t add to price pressures.
Among stocks on the move, Bristol-Myers Squibb (BMY) was up more than 2% after the company received FDA approval for a drug to treat schizophrenia. Costco (COST) was down about 1.5% after reporting earnings late Thursday, as revenue came in slightly below expectations.
Large-cap tech stocks, which have helped lead the broader market rally, were mixed in early trading. Apple (AAPL) and Alphabet (GOOGL) were rising, while AI investor favorite Nvidia (NVDA), Microsoft (MSFT), Meta Platforms (META) and Amazon (AMZN) lost ground.
U.S.-traded shares of Chinese companies were rising once again Friday. The iShares MSCI China ETF (MCHI) was up about 2%, as conglomerate Alibaba Group Holding (BABA), PDD Holdings (PDD), parent of online marketplace Temu, and online retailer JD.com (JD) moved higher. Shares of Chinese companies and others with significant exposure to the country have risen this week as authorities have introduced a wide range of stimulus measures to boost China’s economy.
Gold futures were down slightly at around $2,685 an ounce, after surging above $2,700 yesterday for the first time ever. Oil futures were little changed, bitcoin rose nearly 2% to around $66,500, its highest level in more than a month.
Read More: Stocks Rise After Encouraging Inflation Report; Dow Hits Record