Wall Street’s main indexes gained on Friday after data showed inflation slowed in February, supporting hopes of a softer monetary policy approach from the Federal Reserve.
The Commerce Department’s report showed the personal consumption expenditure (PCE) index, which is the Federal Reserve’s preferred inflation gauge, rose 0.3% in February, on a monthly basis, compared with a 0.6% rise in January.
Traders’ bets of a 25-basis-point rate hike in May stand at 52.5%, with odds of a pause at 47.5%, according to CME Group’s Fedwatch tool.
“As the Fed rate hikes are now kind of starting to take hold right about a year later since they first began perhaps it is a sign that their hikes are starting to cool inflation,” said Brandon Pizzurro, director of public investments at Guidestone Capital Management.
“But in terms of the Fed’s calculus, they’ll have to have more confirmation that disinflation is really taking hold beyond just a few data points here and there.”
Boston Fed President Susan Collins noted that it was still early for the central bank to assess whether its rate hikes have gone far enough to bring inflation back to the Fed’s 2% target.
Consumer discretionary and real-estate were the top sector index performers with around 0.9% gains each.
As U.S. 10-year Treasury yields fell to a session low of 3.51% after the data, major growth names like Apple Inc, Meta Platforms and Amazon.com gained between 0.3% and 0.8%.
Limiting gains on the S&P 500, Micron Technology dropped 3.0% after news that China was set to review the chipmaker’s products sold in the country. The broader Philadelphia semiconductor index fell 0.5%.
Friday will cap a turbulent first quarter for stocks, marked by sticky inflation, shockwaves from the collapse of two regional U.S. banks and signs of trouble in some European banks, as well as a repricing of interest rate expectations from the Fed.
The Nasdaq is set for its biggest quarterly percentage gain since the end of 2020 as investors shifted toward major technology and growth stocks from financial stocks amid fears of a bank contagion, while the cyclicals-heavy Dow Jones is in the red.
The benchmark S&P 500 has gained nearly 6% so far in the first quarter, with the technology sector up about 20% while the financials index is set for its worst quarter since June.
At 9:46 a.m. ET, the Dow Jones Industrial Average was up 176.19 points, or 0.54%, at 33,035.22, the S&P 500 was up 19.64 points, or 0.48%, at 4,070.47, and the Nasdaq Composite was up 63.40 points, or 0.53%, at 12,076.87.
Virgin Orbit Holdings tanked 40.8%, a day after the rocket maker said it was cutting about 85% of staff.
Companies linked to Donald Trump such as Digital World Acquisition Corp and Phunware Inc jumped 10.2% and 3.4%, respectively, amid retail investor interest, a day after the former president was indicted in a historic first.
Advancing issues outnumbered decliners by a 6.27-to-1 ratio on the NYSE and by a 2.76-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and no new low, while the Nasdaq recorded 35 new highs and 46 new lows.
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