Dow rises 350 points as Wall Street reacts to PCE inflation data

Stocks were higher in early trading on Friday as the market reacted to the latest U.S. inflation data.

Summary

• Dow jumped over 350 points as investors reacted to key inflation data.
• Core personal consumption expenditures price index data came in at 0.29% annually in August.
• Wall Street was higher after three days of losses.

The S&P 500 gained 0.5% and the Nasdaq Composite added 0.4%. Meanwhile, the Dow Jones Industrial Average jumped more than 350 points.

Gains across the U.S. stock market came as data from the Commerce Department showed the personal consumption expenditures price index for August increased by 0.29% on a seasonally adjusted basis. While slightly up, this reading of the Federal Reserve’s preferred inflation measure, was in line with economists estimates

August’s reading of core PCE also showed inflation rose 0.2% month over month for August, again in line with Wall Street expectations.

Wall Street expects rate cuts

Stocks thus rose as investors maintained the outlook of two more quarter-point rate cuts in 2025, with the Fed’s next meetings in October and December. Gains saw major U.S. gauges tick up after this week’s wobbling, with investors taking the PCE data and the solid jobs data on Thursday as a positive outlook.

After stocks witnessed a worrying three-day pullback amid the latest uncertainty, analysts say the PCE data has slightly buoyed markets.

David Russell, TradeStation’s global head of market strategy, noted in comments highlighted by CNBC that the jobs claims and gross domestic product revision had “undermined” the overall dovish narrative held in recent weeks. However, the latest data on core PCE has somewhat calmed investor jitters

“This morning’s US economic data confirms a strong economy, with the Federal Reserve’s preferred inflation gauge (PCE) settling near 3%,” said Mohamed El-Erian, a top economist and Allianz advisor. “Markets are likely to welcome these numbers, especially since inflation near the 3% level is not unsettling long-term expectations,” he added.

While the S&P 500 advanced and the other major indices showed an upbeat open, Bitcoin (BTC) remained weak below $110,000 after this week’s losses. Gold held near record highs.