U.S. Stocks May See Initial Strength Following Inflation Data

Stocks may move to the upside in early trading on Friday, adding to the gains posted in the previous session. The major index futures are currently pointing to a modestly higher open for the markets, with the S&P 500 futures up by 0.2 percent.

The futures edged higher following the release of closely watched readings on U.S. consumer price inflation in the month of August.

The Commerce Department said its personal consumption expenditures (PCE) price index inched up by 0.1 percent in August after rising by 0.2 percent in July. The uptick matched expectations.

The report also said the annual rate of growth by the PCE price index slowed to 2.2 percent in August from 2.5 percent in July. Economists had expected the pace of growth to slow to 2.3 percent.

The slightly bigger than expected slowdown by annual price growth may generate optimism the Federal Reserve will continue to aggressively lower interest rates in the coming months.

Excluding food and energy prices, the core PCE price index also edged up by 0.1 percent in August after increasing by 0.2 percent in July. Core prices were expected to rise by another 0.2 percent.

Meanwhile, the Commerce Department said the annual rate of growth by the core PCE price index accelerated to 2.7 percent in August from 2.6 percent in July, in line with estimates.

The readings on inflation, which are said to be preferred by the Fed, were included in the Commerce Department’s report on personal income and spending.

Shortly after the start of trading, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of September.

The consumer sentiment index is expected to be upwardly revised to 69.3 from the preliminary reading of 69.0, which was up from 67.9 in August.

Following the pullback seen during Wednesday’s session, stocks moved back to the upside during trading on Thursday. The major averages gave back ground after an early rally but managed to end the day firmly into positive territory.

The S&P 500 rose 23.11 points or 0.4 percent to a new record closing high of 5,745.37, the Dow advanced 260.36 points or 0.6 percent to 42,175.11 and the Nasdaq climbed 108.09 points or 0.6 percent to 18,190.29.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged by 2.3 percent, while Hong Kong’s Hang Seng Index spiked by 3.6 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has jumped by 1.1 percent, the French CAC 40 Index is up by 0.5 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

In commodities trading, crude oil futures are inching up $0.03 to $67.70 a barrel after plunging $2.02 to $67.67 a barrel on Thursday. Meanwhile, after climbing $10.20 to $2,694.90 an ounce in the previous session, gold futures are edging down $2.90 to $2,692 an ounce.

On the currency front, the U.S. dollar is trading at 142.87 yen versus the 144.80 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1181 compared to yesterday’s $1.1176.