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Stock prices rebounded modestly after the core personal consumption expenditures index came in as expected.
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That leaves room for the Federal Reserve to cut interest rates this year.
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The possibility of an interest rate cut has also increased due to downward revisions to first-quarter GDP figures.
U.S. stocks reversed this week’s downward trend and rebounded modestly after the Federal Reserve’s favorite inflation gauge came in line on Friday and showed signs of moderating stock prices.
The lack of unexpected changes in the personal consumption expenditures index was welcomed by investors and strengthened the odds of a rate cut this year. The index rose while the 10-year Treasury yield fell by more than 4 basis points.
As expected, core PCE rose 0.2% in April. On an annualized basis, it rose 2.8%, slightly above expectations for a 2.7% increase.
Earlier this week, first-quarter GDP data was revised downward due to weak consumer spending, giving the Fed even more reason to eventually be forced to cut interest rates, with futures markets predicting at least one cut as soon as September.
“Markets have been worried about inflation this year, but there was a sigh of relief this morning when inflation numbers weren’t higher than expected. There may be some good news in the report, including that slowing consumer spending could be a harbinger of lower inflation,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
Below are U.S. stock indexes as of the start of trading at 9:30 a.m. on Friday.
Here’s something else that happened today:
Commodities, Bonds and Cryptocurrencies:
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Oil prices rose. West Texas Intermediate crude rose 0.82% to $78.28 a barrel. International benchmark Brent crude rose 0.54% to $82.89 a barrel.
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Gold rose 0.56% to $2,356 per ounce.
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The yield on the 10-year Treasury note fell 4 basis points to 4.51%.
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Bitcoin rose 0.5% to $68,709.
Read the original article on Business Insider
