The consumer price index rose 0.4% in August, month over month and 3.4% year over year.
- The S&P 500 ended Friday 0.9% higher, while the Nasdaq 100 rose 0.9% and the Dow Jones Industrial Average added 1%.
- Odds of a September rate hike touched almost 90%, according to the CME FedWatch tool.
- Microsoft Corp. plans to more than triple its data-center capacity.
U.S. stock indices rose on Friday as oil prices calmed and the consumer inflation print came in as expected, as investors shift focus to the Fed’s rate-setting meeting due next week.
The S&P 500 ended Friday 0.9% higher, while the Nasdaq 100 rose 0.9% and the Dow Jones Industrial Average added 1%. The Russell 2000, which tracks stocks with small market capitalizations, rose about 0.5%.
However, all three benchmark indices ended the week lower as inflation and rate-hike risks dampened investor confidence.
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) rose 0.9%, and Invesco QQQ Trust (QQQ) ended Friday 0.9% higher, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) was up 1%.
Meanwhile, the VanEck Semiconductor ETF (SMH) gained 1.4%, while the iShares Semiconductor ETF (SOXX) rose 2%, tracking gains in Advanced Micro Devices (AMD), and Intel (INTC). The broader Vanguard Information Technology ETF (VGT) ended 1.2% higher, tracking weakness in Meta (META), Apple (AAPL), and Tesla (TSLA).
Retail sentiment on Stocktwits for QQQ, SPY, and DIA was ‘bearish,’ with ‘high’ message volumes.
US Market Drivers
| Index | Move | Close |
| Dow Jones Industrial Average | 1% | 52,573.29 |
| S&P 500 | 0.9% | 7,656.98 |
| Nasdaq 100 | 0.9% | 29,368.44 |
In August, consumer inflation expanded 0.4% sequentially and 3.4% on an annualized basis, matching consensus expectations. Excluding volatile food and energy components, core CPI advanced 0.3% month-over-month, marginally topping projections.
Treasury yields held relatively stable following the release, with the benchmark 2-year Treasury yield crossing 4.6% to reach peaks unseen since July 2024 as market participants price in monetary tightening. According to the CME FedWatch tool, the probability of a 25-basis-point rate increase at next week's policy meeting stands near 90%.
Investors have been tracking inflation numbers to judge the Federal Reserve’s rate decision due next week. In the previous session, the Producer Price Index (PPI) showed a monthly expansion of 0.4%, lifting headline producer inflation to an annual rate of 5.4%, higher than the 5.3% economists expected.
“There’s no guarantee that the Fed will hike next week, but it’s hard to see how the central bank can justify leaving rates on hold,” Chris Zaccarelli at Northlight Asset Management told Bloomberg.
Key Trending Stocks
Microsoft Corp. (MSFT): The company plans to more than triple its data-center capacity, an effort that could help the company overcome a computing shortage that has forced it to turn away some AI and cloud business.
Dell Technologies (DELL) and Hewlett Packard Enterprise (HPE): The stocks were the two biggest gainers in the S&P 500 on Friday following strong Oracle results and its reiteration of capex plans.
Estée Lauder Companies Inc. (EL): The company secured a major procedural victory in its intellectual property dispute against Walmart Inc. (WMT).
PayPal (PYPL): CEO Enrique Lores is charting an independent path forward for the payments pioneer, choosing to rebuild the company rather than sell it following a stalled buyout attempt
Paramount Skydance (PSKY) and California’s attorney general were reportedly ordered by the court to set two consecutive days in late October for in-person talks aimed at settling the state’s lawsuit over the studio’s bid for Warner Bros. Discovery.
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