Stocks rose on Friday as investors digested the latest inflation data and its potential impact on interest rate expectations. The S&P 500 and Nasdaq Composite both saw gains, while the Dow Jones Industrial Average traded around the flatline. Investors are closely watching the release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge. The August data showed a slight cooling in inflation, which could lower expectations of an interest rate hike in November.
However, stocks are set to end the month and quarter with sharp losses, with the major indexes facing drops of 3% to 5%. Rising oil prices and concerns about the Fed’s higher-for-longer rates strategy have contributed to the market’s decline.
Bonds also saw some relief on Friday, with the yield on 10-year Treasuries falling after reaching levels not seen in over 15 years. However, the 30-year Treasury yield is still on track for its biggest jump since 2009, causing anxiety about the impact of the bond rout.
The possibility of a US government shutdown is also weighing on investors’ minds, as it could have significant harm to the economy and stock market. Lawmakers are likely to miss the deadline to avert a shutdown, with no clear resolution in sight.
In individual stocks, Nike shares rose by over 6% after the retailer reported better-than-expected first-quarter profit and expressed confidence in Chinese demand.
Overall, investors are weighing various factors, including inflation data, bond yields, potential government shutdown, and individual company performances, as they make decisions about where to allocate their investments. The stock market is navigating through a volatile period, and uncertainties about the Fed’s tightening campaign and the long-term effects of the pandemic remain.