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U.S. stocks are rising after better than expected monthly inflation data

Published 29/09/2023, 14:54
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Investing.com -- U.S. stocks were rising on Friday, the final trading day of the month and quarter, as better than expected monthly inflation readings cheered investors.

At 9:47 ET (13:47 GMT), the Dow Jones Industrial Average was up 77 points or 0.2%, while the S&P 500 was up 0.6% and the Nasdaq was up 1.2%.

The main indices on Wall Street finished in the green on Thursday, with the tech-heavy Nasdaq Composite the outperformer following a climb of 0.8%. Stocks were supported by a pull-back in Treasury yields from 16-year highs.

Heading into the final trading day of both the month, the Nasdaq and benchmark S&P 500 are on course to slip to their worst months so far this year, while the 30-stock Dow Jones Industrial Average is on pace to decline by 3%.

Attention has been fixed recently on the Fed's future interest rate path, as well as a spike in oil prices and an ongoing budgetary stand-off in Washington that threatens to cause a government shutdown.

PCE looms large

On the data front, the August personal consumption expenditures price index -- the Federal Reserve's preferred inflation gauge -- beat expectations on a monthly basis. The top line reading came in at 3.5% annually and 0.4% from the prior month. Core PCE, which excludes fuel and food prices, came in at 3.9% for the year and 0.1% for the month. Both monthly gains were slightly lower than forecast.

Economists expected the headline PCE reading for August to accelerate slightly, an occurrence that would suggest lingering upward pressure on prices in the world's largest economy.

Fed officials will likely be paying close attention the metric as they decide whether to raise borrowing costs again this year.

The American central bank held rates at a range of 5.25% to 5.50% last week, but flagged that further tightening may be required at either its November or December meetings to help cool inflation. 

Nike beats profit estimates

In corporate news, Nike Inc (NYSE:NKE) shares jumped 9% after the athletic apparel group reported much better than expected fiscal first-quarter earnings that overshadowed a miss on revenue, pressured by weakness in North America and an economic slowdown in its key China market. 

Earnings per share during the three-month period came in at 94 cents on revenue of $12.94 billion. Analysts polled by Investing.com had anticipated EPS of 75 cents on sales of $13.02B.

Bernstein analysts said Oregon-based Nike, which also maintained its fiscal year 2024 guidance, delivered "a nice beat."

Oil heading for weekly gain amid supply tightness

Oil prices gained in choppy trading on Friday, remaining on course for a 2% increase this week amid supply tightness in the U.S. and hopes for a bump up in demand in China during its Golden Week holiday.

Prices have surged by 30% in the latest quarter to their highest levels in 2023 thanks in part to moves by Saudi Arabia and Russia to extend output cuts until the end of the year. Further support has come recently from the U.S., where storage at a major delivery point for U.S. crude futures is at its lowest level since July 2022.

Meanwhile, strong travel activity over the week-long Golden Week holiday in China is expected to boost demand in the world's biggest fuel importer.

Analysts are also looking ahead to a ministerial panel of the Organization of the Petroleum Exporting Countries and its allies -- known as OPEC+ -- next week, when reports suggest that Saudi Arabia, the group's de facto leader, may introduce a potential reduction in voluntary supply cuts.

(Oliver Gray contributed to this report)

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