The Dow rose more than 400 points to an all-time high on Friday as a positive inflation report cleared the way for the Federal Reserve to focus on strengthening the labor market while continuing to ease interest rates. did.
In recent trading, the Dow Jones Industrial Average rose 442 points, or 1%, to $42,617. The blue-chip index hit an all-time high of 42,628.32.
The S&P 500, which closed at an all-time high on Thursday, rose 0.1%, while the Nasdaq fell 0.2%. The three major indexes have been on an upward trend for three consecutive weeks.
Consumer spending rose modestly in August, a Commerce Department report said, suggesting the economy maintained some of its solid momentum in the third quarter while inflationary pressures continued to ease.
“We're relieved that (inflation) is moving in the right direction and we hope it continues to move in that direction,” said Joe Saluzzi, co-head of equity trading at Themis Trading.
“It doesn't really matter whether it's 50bps or 25bps. What matters is whether we continue to cut rates next year.”
The probability that the central bank will cut interest rates by 50 basis points at its November meeting is about 52.1%, compared with 50% before the data was released. According to CME Group's FedWatch tool, the 25bps reduction rate is approximately 47.9%.
Moderating inflation toward the central bank's 2% target has given the Fed plenty of room to cut interest rates by 50 basis points last week and begin an easing cycle. The focus now shifts to a number of labor market reports to be released next week.
The Russell 2000 index of small-cap stocks outperformed, rising 0.7%.
Tech stocks such as Nvidia and Amazon fell 0.9% and 0.4%, respectively, weighing on the Nasdaq.
The University of Michigan's final estimate of consumer sentiment for September was 70.1, compared with the estimate from a Reuters poll of economists of 69.3.
Fed Director Michelle Bowman's remarks later in the day will continue to attract attention.
Federal Reserve President Lisa Cook said late Thursday that the central bank's unusual actions earlier this month could address growing “downside risks” to employment.
Among other stocks, Bristol-Myers Squibb rose 2.3% after the FDA approved a drug to treat schizophrenia.
Costco Wholesale fell 2.8% after weak fourth-quarter sales.
U.S.-listed shares of Chinese companies including Alibaba rose 3.5%, PDD Holdings rose 5.8%, as China's central bank cut interest rates and injected liquidity into the banking system in its latest economic stimulus package. NetEase rose 2.8%.
Mining companies such as Arcadium are down 4.2% following reports that China's major cities Shanghai and Shenzhen plan to lift key restrictions remaining on home purchases in a bid to attract potential buyers. BHP's US-listed shares rose 1.5%.
