Wall Street closed higher on Friday, pulled up by utilities and discretionary stocks. Inflation numbers released on the day came in line with expectations and fueled the notion that there would be further rate cuts in 2025. All three benchmark indexes finished in the green.
The Dow Jones Industrial Average (DJI) climbed 0.7%, or 299.97 points, to close at 46,247.29. Twenty-four components of the 30-stock index ended in positive territory, while six ended in negative.
The tech-heavy Nasdaq Composite added 99.37 points, or 0.4%, to close at 22,484.07.
The S&P 500 gained 38.98 points, or 0.6%, to close at 6,643.7. All 11 broad sectors of the benchmark index closed in the green. The Utilities Select Sector SPDR (XLU), the Consumer Discretionary Select Sector SPDR (XLY) and the Materials Select Sector SPDR (XLB) advanced 1.6%, 1.5% and 1.2%, respectively.
The fear gauge CBOE Volatility Index (VIX) decreased 8.7% to 15.29. A total of 17 billion shares were traded on Friday, lower than the last 20-session average of 18.1 billion. Advancers outnumbered decliners by a 2.25-to-1 ratio on the NYSE and by 1.69-to-1 on the Nasdaq.
Wall Street indexes climbed on Friday as investors welcomed the latest Personal Consumption Expenditures (PCE) price index report, the Fed’s preferred measure of inflation. The data came in line with expectations, showing continued moderation in price pressures. This reassured markets that inflation is moving steadily toward the Fed’s 2% target, reducing concerns that policymakers might delay or reverse their plans for rate cuts.
All three benchmark indexes closed higher, reflecting optimism that monetary policy will remain supportive in the coming months. Stable inflation reinforced the likelihood of lower borrowing costs ahead. Investors interpreted the PCE report as a sign of progress in the Fed’s inflation battle while still allowing for sustainable economic growth. PCE for August came in at 0.4%, having grown by the same rate in July. Core inflation for August increased 0.2%, also maintaining the same rate of growth as in July.
Friday’s move underscored the importance of the PCE index in shaping investor sentiment. Unlike the Consumer Price Index (CPI), the PCE provides a broader and more accurate picture of household spending and inflationary trends, making it central to Fed decision-making. With the latest numbers showing no fresh inflationary flare-ups, equity markets found relief in the idea that the Fed is unlikely to alter its trajectory.
