WASHINGTON (dpa-AFX) - Reflecting a largely positive reaction to closely watched inflation data, stocks have moved mostly higher during trading on Friday. The major averages have all moved to the upside on the day, with the Nasdaq and the S&P 500 reaching new record intraday highs.
The major averages have pulled back off their highs of the session in recent trading but remain firmly positive. The Dow is up 223.48 points or 0.6 percent at 39,387.54, the Nasdaq is up 79.94 points or 0.5 percent at 17,938.62 and the S&P 500 is up 25.60 points or 0.5 percent at 5,508.47.
The strength on Wall Street comes following the release of a Commerce Department report showing readings on consumer price inflation in the month of May came in line with economist estimates.
The report said the personal consumption expenditures (PCE) price index came in unchanged in May after rising by 0.3 percent in April. The unchanged reading matched expectations.
The core PCE price index, which excludes food and energy prices, inched up by 0.1 percent in May after climbing by an upwardly revised 0.3 percent in April.
Economists had expected the core PCE price index to tick up by 0.1 percent compared to the 0.2 percent increase originally reported for the previous month.
The Commerce Department also said the annual rates of growth by the PCE price index and the core PCE price index both slowed to 2.6 percent from 2.7 percent and 2.8 percent, respectively. The slowdowns also matched estimates.
The slowdowns in the annual rates of consumer price growth have led to optimism about the outlook for interest rates, as Federal Reserve officials have repeatedly said they need greater confidence inflation is slowing before they will consider cutting rates.
'Unchanged May PCE inflation puts a September rate cut very much on the table, confirming expectations created by CPI and PPI reports two weeks ago,' said FHN Financial Chief Economist Chris Low. 'Continuing low inflation in coming months is necessary, but every journey begins with a step in the right direction.'
Stocks saw further upside following the release of a report from the University of Michigan showing consumers' year-ahead inflation expectations fell to 3.0 percent in June from 3.3 percent in May.
Meanwhile, long-run inflation expectations came in at 3.0 percent for the third consecutive month and have remained remarkably stable over the last three years, the University of Michigan said.
Sector News
Networking stocks are extending the strong upward move seen in the previous session, driving the NYSE Arca Networking Index up by 2.4 percent.
Renewed optimism about the outlook for interest rates is also contributing to the considerable strength among banking stocks, with the KBW Bank Index surging by 2.4 percent.
Significant strength is also visible among semiconductor stocks, as reflected by the 2.0 percent jump by the Philadelphia Semiconductor Index.
Steel, transportation and housing stocks are also seeing notable strength, moving higher along with most of the other major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday, Japan's Nikkei 225 Index climbed by 0.6 percent, while China's Shanghai Composite Index advanced by 0.7 percent.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the French CAC 40 Index is down by 0.5 percent, the U.K.'s FTSE 100 Index is up by 0.2 percent and the German DAX Index is up by 0.5 percent.
In the bond market, treasuries have moved modestly lower over the course of the session after seeing initial strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.4 basis points at 4.312 percent.
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