The Dow Jones Industrial Average and the S&P 500 advanced on Friday after new government data showed that a key inflation measure met economist expectations. The report on the Personal Consumption Expenditures (PCE) price index, which is closely watched by the Federal Reserve, provided some relief to investors concerned about future interest rate policy.
In corporate news, Boeing shares saw a significant increase following reports that federal regulators are preparing to ease production restrictions on its 737 MAX aircraft. The positive sentiment was not universal, however, as the technology-heavy Nasdaq Composite traded lower, and shares of Costco Wholesale declined despite a strong earnings report.
Key Takeaways
- The Dow Jones Industrial Average rose approximately 0.4%, while the S&P 500 gained 0.3%. The Nasdaq Composite fell by 0.2%.
- The core PCE price index, the Federal Reserve's preferred inflation gauge, rose 0.2% in August and 2.9% annually, meeting Wall Street estimates.
- Boeing (BA) stock jumped nearly 4% on news that the FAA is expected to lift production limits on the 737 MAX.
- Costco Wholesale (COST) shares declined by about 1% after its same-store sales growth came in slightly below analyst expectations.
Market Reacts to Federal Reserve's Preferred Inflation Metric
Investor sentiment on Friday was largely shaped by the latest inflation figures from the Commerce Department. The core Personal Consumption Expenditures (PCE) price index, which excludes volatile food and energy costs, increased by 0.2% for the month of August. This brought the annual increase to 2.9%, precisely in line with projections from economists surveyed by Econoday.
The headline PCE price index, which includes all items, rose by 0.3% for the month and 2.7% over the past year. These figures also matched market expectations. As the Federal Reserve's primary tool for measuring inflation, the in-line PCE data suggested to many investors that the central bank's current monetary policy is having its intended effect, potentially reducing the likelihood of more aggressive interest rate hikes.
Why the PCE Index Matters
The Federal Reserve favors the PCE price index over the more widely known Consumer Price Index (CPI). This is because the PCE index accounts for changes in consumer behavior, such as substituting less expensive goods for pricier ones. Its composition provides what the Fed considers a more comprehensive picture of inflation trends, making it a critical data point for monetary policy decisions.
The report also showed that personal income grew by 0.3% and personal consumption expenditures increased by 0.4%, both aligning with forecasts. The stability in these numbers provided a degree of confidence that the economy is moderating without stalling.
Major Indices Show Mixed Performance
The stock market's reaction to the economic data was mixed across the major indices. The Dow Jones Industrial Average showed the most strength, climbing 180 points, or 0.4%. The broader S&P 500 also posted a modest gain of 0.3%.
However, the technology sector showed some weakness. The Nasdaq Composite edged down by 0.2%, weighed down by declines in some of its key components. This divergence highlights a split in investor sentiment, with more value-oriented and industrial stocks outperforming growth-focused technology names.
Small-cap stocks, often seen as a barometer for domestic economic health, performed well. The Russell 2000 index, which tracks smaller companies, was up 0.3% during the session.
Market Snapshot: Friday's Key Numbers
- Dow Jones: +0.4% (+180 points)
- S&P 500: +0.3%
- Nasdaq Composite: -0.2%
- Russell 2000: +0.3%
- 10-Year Treasury Yield: 4.18%
- WTI Crude Oil: ~$66/barrel (+1.5%)
Boeing Stock Leads Dow Jones Higher
One of the day's biggest stories was the performance of Boeing (BA), which saw its shares jump by nearly 4%. The surge followed a report from The Wall Street Journal indicating that the Federal Aviation Administration (FAA) is preparing to ease production restrictions on the company's 737 MAX aircraft.
These restrictions were put in place following earlier safety concerns, and their potential removal signals a significant operational and financial milestone for the aerospace giant. Investors reacted positively to the news, seeing it as a key step toward normalizing production and delivery schedules.
The optimism surrounding Boeing also lifted related stocks. Howmet Aerospace (HWM), a key supplier for Boeing, saw its shares rise by 2%. The move pushed the stock toward new all-time highs, reflecting the interconnected nature of the aerospace supply chain.
Sector and Individual Stock Highlights
While Boeing captured headlines, several other companies and sectors experienced notable movements during Friday's trading session.
Technology and Retail Movers
In the Nasdaq-100, semiconductor stocks showed divergent paths. GlobalFoundries (GFS) was a top performer, with its stock soaring 8%. Intel (INTC) also gained a solid 2%. On the other hand, Marvell Technology (MRVL) shares fell 1.8%, and PDD Holdings (PDD) declined 1.2%.
Costco Wholesale (COST) shares dipped nearly 1% despite the company reporting quarterly earnings and revenue that surpassed analyst estimates. The retailer reported earnings per share of $5.87 on revenue of $86.2 billion. However, its same-store sales growth of 5.7% was just shy of the 5.9% increase projected by FactSet, which appeared to disappoint some investors.
Other major technology stocks had varied results. Apple (AAPL) stock was down 1% in premarket trading, threatening to reverse some of its recent gains. Meanwhile, Microsoft (MSFT) shares were up 0.8% as the company continued its efforts to reclaim its 50-day moving average, a key technical indicator.
Commodities and Other Sectors
The commodities market also saw upward movement. Gold futures climbed close to 1%, with the price approaching $3,800 per ounce. This boosted several gold mining stocks, including DRDGold (DRD), Idaho Strategic Resources (IDR), and Gold Fields (GFI), which were among the top performers in the MarketSurge Growth 250 index.
In the broader market, the 10-year Treasury yield ticked higher to 4.18%, indicating a slight shift in the bond market. West Texas Intermediate (WTI) crude oil futures also rose, gaining 1.5% to trade near $66 per barrel, reflecting ongoing dynamics in global energy supply and demand.
