US: Stocks rally after better inflation data
WALL Street stocks cheered a benign US inflation report on Friday, powering the market to a positive conclusion to the week despite weakness in tech shares in recent days.
The report showed that the personal consumption expenditures price index eased to an annual rate of 2.5 per cent in June, from 2.6 per cent, amounting to progress in a key US Federal Reserve indicator.
Futures markets overwhelmingly expect the Fed to cut interest rates in September.
The Dow Jones Industrial Average jumped 1.6 per cent to 40,589.34.
The broad-based S&P 500 advanced 1.1 per cent to 5,459.10, while the tech-rich Nasdaq Composite Index climbed 1.0 per cent to 17,357.88.
Stocks tumbled on Wednesday, led by a rout in tech shares, which have been seen as overvalued after strong gains in the first half of 2024. Despite the Nasdaq’s bounce on Friday, the index finished the week down more than two per cent.
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“We continue to have slowing inflation and solid growth,” conditions “consistent with a soft landing thesis,” said Angelo Kourkafas of Edward Jones.
Kourkafas expects more of a “rotation” away from technology to other sectors in the upcoming period.
Among individual companies, 3M shot up around 23 per cent after reporting better-than-expected earnings and lifting its full-year profit forecast. Analysts see the industrial heavyweight as well positioned following progress on major litigation issues that have dogged the company.
But Biogen dove 7.2 per cent after announcing European officials gave a negative reading on a new Alzheimer’s disease treatment. Biogen and partner Eisai said they would seek a reexamination of the decision.
DexCom, which supplies glucose monitoring systems for diabetes, plunged more than 40 per cent after lowering its sales forecast. AFP
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