Market News

Wall Street ended mixed on Friday as investors digested the inflation data and expectations of another Fed rate cut this year. The S&P 500 and the Nasdaq ended the day in negative territory, while the Dow Jones Industrial Average closed higher.However, last week was positive for Wall Street, with the S&P 500 still on track to post its best September gains in five years.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.3% or 137.89 points to close at 42,313.00. Twenty-four components of the 30-stock index ended in positive territory, while six ended in negative.

The major gainer of the Dow was Chevron Corporation CVX. The stock price of this oil and gas company rose 2.5%. Chevron currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The tech-heavy Nasdaq Composite declined 70.70 points or 0.4% to 18,119.59.

The S&P 500 fell 0.1%, or 7.20 points, to end at 5,738.17. Three broad sectors of the benchmark index closed in the red, while eight ended in the green. The Technology Select Sector SPDR (XLK), the Materials Select Sector SPDR (XLB), and the Health Care Select Sector SPDR (XLV) lost 0.9%, 0.2% and 0.1%, respectively. In comparison, the Energy Select Sector SPDR (XLE) added 2%.

The fear-gauge CBOE Volatility Index (VIX) increased 10.3% to 16.96. A total of 11.50 billion shares were traded on Friday, lower than the last 20-session average of 11.87 billion. The S&P 500 posted 42 new 52-week highs and no new lows; the Nasdaq Composite recorded 74 new highs and 65 new lows.

U.S. Inflation Cools, Opening Door for Fed Rate Cuts

U.S. inflation rose slightly in August, reaching its lowest annual rate over three years. The Bureau of Economic Analysis reported that the headline PCE inflation rate rose 0.1% month over month in August compared with 0.4% in the previous month. Year over year, PCE inflation fell 2.2% in August compared with 2.5% in July.

Core PCE inflation rate (excluding volatile food and energy items) — Fed’s favorite inflation gauge — rose 0.1% month over month in August compared with 0.2% in the previous month. Year over year, core PCE inflation rose 2.7% in August compared with 2.6% in July.

The cooling inflation provides a favorable backdrop for the Fed to consider additional interest rate cuts, following its recent reduction earlier this month. The Fed's decisions will likely hinge on upcoming labor market data from the Bureau of Labor Statistics, which is expected next Friday.

Weekly Roundup

All three major indexes posted gains for the third consecutive week. The S&P 500 and Dow rose about 0.6%, while the Nasdaq climbed nearly 1%.

Consumer Sentiment Rises in September

The University of Michigan reported that consumer sentiment for September had come in at 70.1, higher than the 67.9 it had registered in August.

August Income and Spending Gains

Per BEA data, personal income increased by $50.5 billion or 0.2% in August. Disposable personal income increased $34.2 billion or 0.2%. Personal spending increased 0.2% and the personal savings rate came in at 4.8%.

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