US stocks rallied on Friday, ending a three-day losing streak, but the major US indices still closed the week in negative territory. The Dow Jones Industrial Average advanced nearly 300 points, or 0.65 per cent, to finish at 46,247. The S&P 500 gained 0.59 per cent to 6,644, while the Nasdaq Composite rose 0.44 per cent to 22,484.
For the week, however, the Nasdaq slipped 0.7 per cent and the S&P 500 lost 0.3 per cent, each recording their first weekly decline in a month. The Dow edged 0.2 per cent lower.
Inflation data matches expectations
The August personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, showed core inflation at a 2.9 per cent annualised rate, right in line with forecasts. The all-items index rose 2.7 per cent year-on-year and 0.3 per cent for the month, also as expected.
Markets are still pricing in two quarter-point rate cuts at the Fed’s upcoming meetings, consistent with the central bank’s own projections.
Jobs and growth complicate the picture
The PCE report followed stronger-than-expected jobless claims data on Thursday and an upward revision in second-quarter GDP growth to 3.8 per cent. Both indicators suggested a resilient economy, which some investors worry could give the Fed less reason to cut rates quickly.
Consumer sentiment in September held broadly steady, according to the University of Michigan survey, with only a slight dip from expectations. Sentiment was especially stable among wealthier households with greater stock holdings.
Technology drag continues
Despite Friday’s rebound, the market was weighed down by ongoing losses in the artificial intelligence sector. Oracle, in particular, fell more than 8 per cent this week as doubts grew over the durability of the AI trade.
ASX set for positive open
Futures signal a stronger start for Australian equities, with the SPI 200 up 0.2 per cent.
Local investors will be watching a series of economic releases this week, including August trade balance data, household spending, and the Reserve Bank’s financial stability review on Thursday.
Economists expect the RBA to keep rates on hold at 3.6 per cent when it meets Tuesday. However, with inflation climbing to 3 per cent in August, its highest in a year, analysts say the central bank is likely to adopt a less dovish tone, signalling that rate cuts may be further away than markets had hoped.
