US stocks: US market rises as cooler inflation data ease October Fed hike bets

US stocks advanced on Wednesday after a softer-than-expected inflation reading strengthened hopes that the Federal Reserve would hold off on raising interest rates next month, Reuters reported.

The Commerce Department said the Personal Consumption Expenditures price index rose 3.4% year over year in August, below the 3.7% increase forecast by economists polled by Reuters.

Separate data showed the US economy expanded at a solid pace in the second quarter, supported by resilient consumer spending and business investment linked to the buildout of AI infrastructure.


“The market had been tracing out a bullish formation, meaning the price pattern suggested that any positive catalyst could trigger a move higher and that’s exactly what happened,” Sam Stovall, chief investment strategist at CFRA Research, told Reuters.

Traders now see a roughly 35% chance of an October rate increase, down from about 45% before the data was released, according to figures compiled by LSEG.

At least four Fed officials, including Minneapolis Fed President Neel Kashkari, are scheduled to speak later on Wednesday.

Most megacap and growth stocks moved higher in early trading. Amazon.com and Apple edged up, while Alphabet gained 2.1%.

At 9:55 a.m. ET, the Dow Jones Industrial Average was up 50.58 points, or 0.10%, at 51,400.50. The S&P 500 gained 33.17 points, or 0.43%, to 7,704.01, while the Nasdaq Composite rose 193.57 points, or 0.72%, to 26,991.11.

Five of the S&P 500’s 11 sectors traded higher, led by information technology and energy. Real estate and financials were the biggest laggards.

Despite September’s weakness, driven by bond-market volatility and elevated oil prices amid the US-Iran conflict, the S&P 500 and Nasdaq remained on track for a second consecutive quarterly gain if the advances held.

The price-weighted Dow was headed for a quarterly decline and its first monthly loss since March.

The benchmark 10-year Treasury yield held steady at 5.246% on Wednesday, a day after touching its highest level since June 2007. Oil prices also rose, with December Brent crude futures moving higher.

Warnings earlier this month from leaders of major AI companies about the technology’s potential existential risks had unsettled the AI trade, which has been the main force behind Wall Street’s climb to record highs this year.

Memory-chip maker Micron Technology’s earnings, due after the closing bell, could provide the next major test for the AI trade. Among individual stocks, Boeing rose 0.2% after the Pentagon selected the plane maker to develop the US Navy’s next-generation stealth fighter.

Boeing beat rival Northrop Grumman to secure the $20 billion development contract. Northrop shares fell 3.8%. Hewlett Packard Enterprise gained 4.4% after the AI-server maker raised its long-term revenue-growth forecast for its networking business and announced a $1.2 billion deal with Vultr.

Moderna dropped 5.8% after Citigroup downgraded the biotech company to “sell” from “neutral.”

The S&P 500 recorded eight new 52-week highs and 13 new lows, while the Nasdaq Composite posted 26 new highs and 81 new lows.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)