U.S. stocks moved higher on Friday after a mild inflation reading strengthened expectations that the Federal Reserve could cut interest rates next week.
By 10:15 ET (15:15 GMT), the Dow Jones Industrial Average was up 235 points, or 0.5%. The S&P 500 gained 35 points, also 0.5%, while the Nasdaq Composite rose 160 points, or 0.7%.
PCE inflation in focus
The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, showed that price pressures remained contained. This reinforced hopes that the central bank may reduce rates next week to support a cooling economy.
Core PCE, which excludes food and energy, eased to 2.8% year-over-year in September. This was below expectations of 2.9%. Month-on-month, core inflation increased 0.2%, matching the August pace.
While the Fed’s focus on price stability has eased slightly in recent months, policymakers will welcome the continued decline in inflation. This trend has encouraged investors to expect a 25-basis-point rate cut at the December 9–10 meeting, especially after softer labor data and broader signs of economic slowing.
Weekly jobless claims dropped by 27,000 to 191,000 last week, the lowest level since September 2022. However, economists warned that the Thanksgiving holiday likely distorted the numbers.
Private-sector payroll figures have also weakened. ADP reported a decline of 32,000 jobs in November, the steepest drop in more than two and a half years. Challenger, Gray & Christmas noted a sharp decline in announced layoffs, but hiring plans remain subdued.
Netflix to acquire Warner Bros. Discovery
In corporate news, Netflix announced an agreement to acquire Warner Bros. Discovery in a cash-and-stock deal valued at $27.75 per share, giving the transaction an enterprise value of about $82.7 billion.
The deal follows a competitive bidding process in which Netflix outbid Paramount Skydance’s offer of nearly $24 a share.
If completed, the acquisition would significantly expand Netflix’s content library and cement its position as one of the industry’s most powerful media companies.
Elsewhere, Ulta Beauty shares jumped after the company beat expectations for its third quarter and raised its full-year guidance.
Victoria’s Secret stock also climbed after posting stronger-than-expected quarterly results, with management reporting continued progress in its turnaround efforts.
On the downside, Hewlett Packard Enterprise shares fell after the company missed revenue expectations for the fourth quarter. HPE reported $9.68 billion in revenue, below the consensus estimate of $9.94 billion.
Oil prices head for weekly gains
Oil prices advanced on Friday, extending gains from the previous session. Market sentiment was supported by expectations of a Fed rate cut and the lack of progress in diplomatic efforts over the Ukraine war.
Brent crude climbed 0.9% to $63.85 a barrel, while West Texas Intermediate rose 0.8% to $60.15 a barrel.
Both benchmarks gained nearly 1% on Thursday and are now on track to finish the week up 1.5%, marking a second consecutive weekly increase.
Ongoing geopolitical tensions and uncertainty over Russian oil supply continue to keep a risk premium in global crude markets.
