Investing.com – U.S. stocks opened mostly higher on Friday after a batch of new economic data showed that the Federal Reserve’s preferred measure of inflation had slowed near its 2% target and that consumer spending growth was broadly flat.
By 09:39 ET (13:39 GMT), the index had added 8 points, or 0.1%, and 30 stocks were up 169 points, or 0.4%. The stock-heavy index was broadly unchanged.
Key personal consumption expenditures index slows; US consumer spending rose 0.2% in August
US consumer spending grew at a slower-than-expected rate in August, while inflationary pressures continued to ease.
Personal spending, which accounts for more than two-thirds of economic activity, grew 0.2% in August, slowing from an unrevised 0.5% increase the previous month, according to data from the Commerce Department’s Bureau of Economic Analysis on Friday. Economists had expected a 0.3% rise. This was the slowest increase in seven months.
Household income growth also unexpectedly slowed to 0.2% from 0.3% in July. This number was expected to increase by 0.4%.
In a post on social media platform X, Cathy Jones, chief fixed income strategist at… Charles Schwab (NYSE:) said both numbers are “slowing down but not falling off a cliff.” Recent wage gains have supported consumer spending activity despite some weakness in the US labor market.
Meanwhile, the personal consumption expenditures price index, which Federal Reserve officials use as a tracker of inflation, rose 0.1% on the month, below estimates that it would match July’s pace of 0.2%. On an annual basis, the reading fell to 2.2%, slower than expectations of 2.3% and 2.5% in July.
When excluding volatile items such as food and fuel, the so-called core PCE price index also slowed to 0.1% month-on-month and rose slightly as expected to 2.7% from 2.6% year-on-year.
The data comes after the Fed cut borrowing costs by 50 basis points last week and indicated it would roll out more withdrawals later this year.
European stocks rise to a record high
European stock markets recorded a new record high in mid-morning trading on Friday, supported by the momentum of a Chinese-led rally in Asia.
Reports that China is considering new stimulus measures — as well as a series of recent support policies aimed at stabilizing the faltering economy — pushed stocks in the country to their best week since 2008.
Luxury goods stocks in Europe, which derive most of their revenue from sales in China, also strengthened. Shares in high-end fashion groups such as LVMH, dry (EPA), Hermes, Hugo Boss, and Burberry all rose, while auto stocks also rose.
Oil is intermittent
Oil prices were volatile on Friday, as traders weighed stimulus measures from China and the potential for increased production from Libya and the OPEC+ oil group.
As of 09:43 EST, futures were down 0.4% at $70.81 per barrel, while US West Texas Intermediate crude futures were down 0.3% at $67.48 per barrel.
In Libya, rival factions claiming control of the country’s central bank agreed on Thursday to end a conflict that has crippled domestic oil production and exports. Analysts quoted by Reuters indicated that more than 500,000 barrels per day of Libyan supplies may return to the markets.
Elsewhere, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, plan to reverse ongoing deep production cuts of 180,000 barrels per day in December.
Investors are weighing expectations for a potential increase in supply with a massive stimulus package from China earlier this week. Analysts noted that it is still uncertain whether these measures will boost activity in the world’s largest oil importer.