Wall Street rises due to a rebound in tech stocks.
The likelihood of a 25-basis-point cut in the Fed's September meeting remained around 88%.
A U.S. inflation report in line with expectations kept hopes alive for an imminent interest rate cut.
On Friday, Wall Street rebounded as major tech and semiconductor stocks recovered from earlier losses. The inflation data, which met expectations, maintained optimism for a potential rate cut.
Industrial conglomerate 3M surged more than 17%, boosting the Dow Jones, after the company raised the lower end of its annual adjusted earnings forecast.
Chip stocks led the tech sector’s recovery, with the Philadelphia SE Semiconductor Index poised to end a three-session losing streak. Nvidia, Intel, Broadcom, and Qualcomm saw gains ranging from 1.2% to 2.6%.
The so-called “Magnificent Seven” stocks had mixed performance in early trading. Apple, Tesla, and Alphabet declined between 0.5% and 1.4%, while Microsoft, Meta Platforms, and Amazon.com rose between 0.4% and 2%.
The Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure, increased 0.1% monthly in June and 2.5% annually, both as expected. Personal income growth was below expectations.
The moderate rise in U.S. prices highlighted improvements in the inflation environment, potentially putting the Fed in a favorable position to begin easing its monetary policy in September.
Small-cap stocks, which are sensitive to economic shifts, rallied, with the Russell 2000 rising 1.7%, potentially marking its third consecutive week of gains if the trend continues.
The likelihood of a 25-basis-point cut in the Fed’s September meeting remained around 88%, according to CME’s FedWatch. Most traders still expect two rate cuts by December, according to LSEG data.
The Dow Jones Industrial Average gained 547.26 points, or 1.37%, to 40,482.33; the S&P 500 rose 43.42 points, or 0.80%, to 5,442.64; and the Nasdaq Composite added 109.36 points, or 0.64%, to 17,291.08.
However, the S&P 500 and Nasdaq were heading toward their second consecutive week of declines as investors sold tech stocks.
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