The S&P 500 increased by 0.6% in the opening session, approaching an end to its longest losing streak in more than a month. The S&P 500 rose 0.3% with gains in almost 400 constituents, the NASDAQ 100 added 0.3%, and the Dow Jones Industrial Average gained 0.3%. The Russell 2000 Index gained 0.2% - it signaled a modest recovery among small-cap stocks.

Globally, the Stoxx Europe 600 gained 0.7% and the MSCI World Index rose 0.2%. The Bloomberg Magnificent 7 Total Return Index remained unchanged, reflecting subdued movement in leading technology shares.

Individual stock movers included Eli Lilly and Merck, which advanced as investors assessed proposed tariffs on imported drugs. Boeing shares improved after regulators returned some certification authority for its 737 Max and 787 jets. Oracle and Wayfair, in particular, experienced significant trading volumes, with reports highlighting sector-specific developments.

Inflation Data Supports Market Stability

US equities ended a three-day losing streak after inflation data came in line with expectations, reducing fears of a sharp price spike. The core personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, increased 0.2% in August. On a yearly basis, the measure held steady at 2.9%, above the Fed’s long-term 2% target but in line with market expectations.

The data reassured investors who feared higher inflation following a more substantial GDP revision earlier in the week. Analysts noted the figures offered stability rather than surprise, which helped lift market sentiment. 

Federal Reserve Chair Jerome Powell recently emphasized that the cooling labor market was the main reason behind September’s interest rate cut. The latest PCE reading reinforced the likelihood of another reduction at the end of October.

Treasury yields showed limited reaction, with the 10-year benchmark holding near 4.17%. Meanwhile, swap traders continued to price in about 40 basis points of rate cuts before the end of 2025.

Consumer Spending and Economic Outlook

In addition to the inflation data, consumer spending in August rose more than expected, reflecting the resilience to increasing interest rates. Personal incomes also increased, indicating stable household demand. This strength continues to hold up corporate earnings, and is a base for broader economic growth going into the third quarter, economists said.

Investors noted that consumption continues to be a driving force for the US economy. As the Fed takes a cautious approach, continued spending could help to maintain growth despite worries about continued inflation. Valuations are still high, but some strategists believe that overall monetary policy changes and resilience will be supportive for equities into the end of the year.

The US dollar weakened, with the Bloomberg Dollar Spot Index down 0.2%. The euro advanced to $1.1692, while the pound strengthened 0.4% to $1.3402. In commodities, West Texas Intermediate crude climbed 2.1% to $66.34 a barrel, and gold prices rose 0.8% to $3,779.90 an ounce.

Also Read: Gold Prices Today: How the US Fed Rate Cut Shapes the Market