Stock market news today: US stocks set for rebound after key Fed-watched inflation data

US stocks rose at the opening bell Friday, poised for a comeback bid as investors embraced new pricing data that showed inflation continuing to ease, solidifying expectations for coming interest-rate cuts.

The Dow Jones Industrial Average (^DJI) added 0.7%, or more than 200 points, after the blue-chip index eked out a closing gain. The S&P 500 (^GSPC) rose about 0.7%, while the Nasdaq Composite (^IXIC) climbed 0.9%, both coming off a failed attempt to rebound from this week’s tech-led sell-off.

Stocks are looking positive after a volatile series of sessions that have put the major gauges on track for hefty weekly losses. The Nasdaq and the S&P 500 have taken a bruising as Big Tech earnings undermined confidence in the AI trade, spurring the ongoing exodus from megacaps into small cap stocks.

That pause in this year’s rally has Wall Street questioning whether the sell-off is a turning point to sustained lower prices or a typical bull-market pullback. In play are earnings-fueled concerns about softness in the US economy, though Thursday’s surprisingly hot GDP print eased those somewhat.

Friday’s big data point was the closely watched Personal Consumption Expenditures (PCE) index, which provided more fuel to the notion of a still-strong economy and gradually cooling inflation. “Core” PCE, which strips out the cost of food and energy and is closely watched by the Fed, came in slightly higher than expectations but rose at its slowest pace in over three years.

Investors are also getting set for quarterly earnings next week from four more “Magnificent Seven” techs — Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Meta (META).

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Fri, July 26, 2024 at 8:22 AM MDT

Coming rate cuts could calm fears of slowing growth

This week’s topsy-turvy trading was fueled in part by fears of slowing growth, and second guessing tied to Big Tech’s AI push.

But Friday’s favorable inflation reading, which will boost the case for the Fed to start cutting rates, could help calm those fears, as more affordable borrowing will help the economy to continue to expand.

“Recently, the market has pivoted to fears of slowing growth over fears of sticky inflation, and we think both concerns are valid, but if the Fed is able to lower rates in a predictable and reasonable manner then the economy should continue to expand and inflation should (very slowly) proceed lower to the Fed’s target,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance, in a note on Friday.

A recent stream of encouraging inflation data has also helped minimize less favorable price pressure data from the first quarter, which Fed officials have said prompted them to rethink their rate-cutting timeline and instead instill a plan of higher rates for longer.

Without that impediment, central bankers now have more leeway to start cutting rates. “For the past few months the inflation data have been cooperating,” Zaccarelli said. And as long as the data keeps coming in to boost the Fed’s confidence in slowing inflation, multiple cuts could be in store for the year.
Fri, July 26, 2024 at 7:31 AM MDT

Stocks poised for rebound after encouraging inflation data

The final session of a volatile trading week had stocks set for a rebound as new inflation data showed easing price pressures, boosting investor confidence in a widely expected September rate cut.

The Dow Jones Industrial Average (^DJI) added 0.6%, or about 200 points, after the blue-chip index eked out a closing gain. The S&P 500 (^GSPC) rose about 0.8%, while the Nasdaq Composite (^IXIC) climbed 1.1%, both coming off a failed attempt to rebound from this week’s tech-led sell-off.
Fri, July 26, 2024 at 6:56 AM MDT

Fed’s preferred inflation gauge steadies ahead of expected cuts

The latest reading of the Fed’s preferred inflation gauge showed prices increased slightly more than expected in June.

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 2.6% over the prior year in June; above economists’ estimate of a 2.5% increase and unchanged from the month prior. Still, the print marked the slowest annual increase for core PCE in more than three years.

Core PCE rose 0.2 % from the prior month, in line with Wall Street’s expectations for 0.2% and faster than the 0.1% increase seen in May.