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Inflation Data Boosts Us Stock Futures, Markets Optimistic on Potential Pause in Rate Hikes

Published 2023-09-29, 12:06 p/m
© Pavlo Gonchar / SOPA Images/Sipa via Reuters Connect
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On Friday, U.S. stock index futures saw an extension in gains following the release of softer-than-expected inflation data. The report, which revealed a less-than-anticipated rise in the personal consumption expenditures (PCE) price index, has ignited hopes for a pause in interest rate hikes by the Federal Reserve.

The Commerce Department's report showed the PCE price index, the Fed's preferred inflation gauge, climbed 0.4% in August, compared with estimates of a 0.5% rise. When excluding volatile food and energy components, the core PCE price index rose by a mere 0.1% in August against estimated advances of 0.2%.

As a result of these figures, at 8:32 a.m. ET on Friday, Dow e-minis were up 181 points or 0.53%, S&P 500 e-minis were up 27 points or 0.62%, and Nasdaq 100 e-minis were up by 129.25 points or 0.87%.

BMO (TSX:BMO) Family Office chief investment officer Carol Schleif noted that Friday's core PCE data suggests inflation is continuing to decelerate, indicating that the Fed's aggressive campaign is working. However, she also highlighted that core PCE remains almost double the Fed's 2% target, prompting the Fed to keep the possibility of another rate hike in play.

European inflation is also showing signs of slowing down, with prices in the eurozone rising at their lowest pace in two years last month, as reported by the European Central Bank. Inflation climbed 4.3% during August.

Despite this positive development in inflation data, U.S. stocks are closing out a challenging month. The S&P 500 is on track to end September over 4% lower while the Nasdaq Composite is set to finish the month 6% lower. The Dow is expected to slide 3%, marking the second consecutive losing month for stocks, and the worst month for the market in 2023.

As markets opened at 9:30 a.m. on Friday, U.S. indexes stood as follows: Dow Jones Industrial Average at 33,837.95, up 0.52% (+174.32 points), and Nasdaq Composite at 13,328.32, up by 0.96%.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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