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US stocks rise after absorbing inflation data
US stock indices rose during the trading session on Friday, June 28, on Wall Street, as traders digested new personal consumption expenditures price index data that indicated a slowdown in inflation, in addition to better-than-expected consumer sentiment data as they count down to the end of a strong first half of the year.
The US Department of Commerce reported on Friday that inflation in May slowed to its lowest annual rate in more than three years. The core personal consumption expenditures index, which excludes more volatile food and energy prices, rose just 0.1% last month and 2.6% year-on-year. Both estimates were in line with the Dow Jones estimates.
The core personal consumption expenditures index is the US Federal Reserve's preferred measure of inflation.
The personal consumption expenditures index, which includes food and energy, was flat on a monthly basis and also rose by 2.6% on a yearly basis, which is also in line with expectations.
“From a market perspective, today's PCE report was close to perfect,” said CIBC Private Wealth US chief investment officer David Donabedian. “This was an unambiguously positive report.”
The Consumer Confidence Index for June was also higher than expected, rising to 68.2 from an initial reading of 65.6. One-year inflation expectations fell to 3% from 3.3% expected in May.
Inflation statistics are of paramount importance to market participants as they try to guess when the Fed will start cutting interest rates. Traders are currently placing a 59.5% chance that the Fed will cut interest rates at its September meeting, according to CME Group's FedWatch tool.
The market officially concludes the first six months of 2024 with the closing bell on Friday.
