S&P, Dow open higher after fresh inflation, consumer spending data

Investing.com -- US stocks opened mostly higher on Friday after a batch of fresh economic data showed that the Federal Reserve's preferred inflation gauge had slowed closer to its 2% target and consumer spending growth was broadly steady.

By 09:39 ET (13:39 GMT), the benchmark S&P 500 had added 8 points or 0.1%, the 30-stock Dow Jones Industrial Average had ticked up by 169 points or 0.4%, and the tech-heavy Nasdaq Composite was widely unchanged.

Headline PCE index slows; US consumer spending rises 0.2% in August

US consumer spending grew at a slower than anticipated rate in August, while inflation pressures continued to ease.

Personal spending, which accounts for more than two-thirds of economic activity, grew by 0.2% in August, slowing from an unrevised 0.5% gain in the prior month, according to data from the Commerce Department's Bureau of Economic Analysis on Friday. Economists had anticipated an uptick of 0.3%. It was the slowest increase in seven months.

Household income growth also unexpectedly slowed to 0.2% from 0.3% in July. The figure was tipped to edge up by 0.4%.

In a post on social media platform X, Kathy Jones, chief fixed income strategist at Charles Schwab (NYSE:SCHW ), said both numbers are "slowing but not falling off a cliff." Wage gains have recently supported consumer spending activity despite some weakening in the US labor market.

Meanwhile, the personal consumption expenditures (PCE) price index, which is used by Federal Reserve officials as a tracker of inflation, rose by 0.1% on a monthly basis, below estimates that it would match July's pace of 0.2%. Year-on-year, the reading cooled to 2.2%, slower than projections of 2.3% and 2.5% in July.

When stripping out volatile items like food and fuel, the so-called core PCE price index also decelerated to 0.1% month-on-month and sped up slightly as anticipated to 2.7% from 2.6% on an annualized basis.

The data comes after the Fed slashed borrowing costs by an outsized 50 basis points last week and signaled that it would roll out more drawdowns later this year.

European stocks rally to record high

European stock markets touched a fresh record high in mid-morning dealmaking on Friday, fueled by momentum from a China-led rally in Asia.

Reports that China was mulling new stimulus measures -- on top of a slew of recent support policies aimed at stabilizing the ailing economy -- powered stocks in the country to their best week since 2008.

Luxury stocks in Europe, which derive much of their revenues from sales in China, were also bolstered. Shares in high-end fashion groups like LVMH, Kering (EPA:PRTP ), Hermes, Hugo Boss, and Burberry all advanced, while automobile stocks gained as well.

Oil choppy

Oil prices were choppy on Friday, as traders assessed the stimulus measures out of China and the prospect of increased output from Libya and the OPEC+ oil group.

As of 09:43 ET, Brent crude futures had dipped by 0.4% to $70.81 per barrel, while US West Texas Intermediate crude futures had fallen by 0.3% to $67.48 a barrel.

In Libya, competing factions staking claims to control the country's central bank agreed on Thursday to end the dispute, which had crimped domestic oil production and exports. Analysts cited by Reuters suggested that over 500,000 barrels per day (bpd) of Libyan supply could return to markets.

Elsewhere, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are planning to reverse 180,000 bpd of deep ongoing output cuts in December.

Investors are weighing the outlook for a possible uptick in supply with a massive stimulus package out of China earlier this week. Analysts have flagged that it remains uncertain if the measures will boost activity in the world's top oil importer.

Source: Investing.com