U.S. stocks close higher after encouraging inflation data

New York [US], July 29: U.S. stocks ended higher on Friday after fresh inflation data closely watched by the Federal Reserve confirmed that inflationary pressures continued to ease.
The Dow Jones Industrial Average rose 176.57 points, or 0.50 percent, to 35,459.29. The S&P 500 added 44.82 points, or 0.99 percent, to 4,582.23. The Nasdaq Composite Index increased 266.55 points, or 1.90 percent, to 14,316.66.
Nine of the 11 primary S&P 500 sectors ended in green, with communication services and consumer discretionary leading the gainers by rising 2.30 percent and 1.85 percent, respectively. Meanwhile, utilities and real estate lost 0.26 percent and 0.25 percent, respectively.
U.S. stocks rebounded on Friday after a new inflation report showed a continued cooling in price pressures, boosting investor confidence in a soft landing for the U.S. economy.
Personal consumption expenditures (PCE) price index, the Federal Reserve's preferred gauge of inflation, increased 3 percent in June from a year ago, according to Commerce Department data released on Friday. That was a cooldown from 3.8 percent in May, marking the smallest annual gain since March 2021,
On a monthly basis, the PCE price index rose a mild 0.2 percent in June after a 0.1 percent increase in May, in line with market expectations, according to the report.
The fresh inflation report also showed that the so-called core PCE price index, which strips out volatile energy and food prices, rose 0.2 percent in June from the prior month and was up 4.1 percent from a year ago. The annual rate of the core PCE in June was the lowest since September 2021.
"In the wake of stronger-than-expected GDP and a better-than-expected earnings season, this (new PCE data) could be the catalyst to send the market to new highs," according to Gina Bolvin, president of Bolvin Wealth Management Group, in an interview with CNBC.
"With inflation steadily cooling, the Fed's historic tightening campaign appears to be ending. The focus on Wall Street won't just be inflation but now also economic activity," said Craig Erlam, senior market analyst at OANDA.
Investors also digested corporate earnings results at the midpoint of the earnings season. With second-quarter results reported from almost half of the companies in the S&P 500, 80 percent have exceeded analysts' earnings expectations, according to FactSet data.
"The fact that earnings are actually turning out not to be as bad as feared is also supporting the market," said Erik Ristuben, chief investment strategist at Russell Investments, in an interview with The Wall Street Journal.
Shares of big tech companies powered the indexes higher again on Friday. Intel shares jumped 6.60 percent as investors cheered a return to profitability, while Meta Platforms and Google parent Alphabet both gained on Friday and advanced more than 10 percent this week. Tesla and other electric vehicle shares also finished higher.
Source: Xinhua