Investing.com-- U.S. stocks rose after a relatively benign inflation report kept open the likelihood that the Federal Reserve will cut interest rates next week.
At 10:15 ET (15:15 GMT), the Dow Jones Industrial Average gained 235 points, or 0.5%, the S&P 500 index gained 35 points, or 0.5%, and the NASDAQ Composite rose 160 points, or 0.7%.
PCE inflation gauge in spotlight
The Fed’s preferred inflation measure, the Personal Consumption Expenditures Price Index (PCE), indicated that inflation remained under control, suggesting that the U.S. central bank can cut interest rates next week to support the slowing economy.
Excluding food and energy, the underlying, or "core," PCE price index fell to 2.8% in the 12 months to September, below the expected 2.9%, and 0.2% month-on-month.
The importance of price stability, the second element of the Fed’s dual mandate, has faded a little of late, but the Fed policymakers will be pleased to see the index falling, further emboldening rate-cut expectations.
Expectations of a 25-basis point reduction at the Federal Reserve’s December 9–10 meeting have been running hot on the back of recent weak labor data and broader signs of economic cooling.
Thursday’s weekly jobless claims plunged by 27,000 to a seasonally adjusted 191,000, the lowest level since September 2022, but economists cautioned that distortions tied to the Thanksgiving holiday may have exaggerated the decline.
Elsewhere, a private-sector payroll report from ADP on Wednesday showed a decline of 32,000 jobs -- the largest drop in over two and a half years, and a report by Challenger, Gray & Christmas stated that announced job cuts dropped sharply in November but hiring intentions remained weak.
Netflix agrees to buy Warner Bros Discovery
In the corporate sector, Netflix (NASDAQ:NFLX) has agreed to acquire Warner Bros Discovery (NASDAQ:WBD) in a cash and stock transaction valued at $27.75 per share, with a total enterprise value of approximately $82.7 billion.
The deal, announced on Friday, follows a weeks-long bidding war where Netflix outbid Paramount Skydance’s (NASDAQ:{{8171’s|PSKY}}) nearly $24-a-share offer with its nearly $28-a-share proposal.
Should the transaction be finalized, it would transform Netflix into a media powerhouse with control over one of the most valuable content libraries in the entertainment industry.
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Elsewhere, Ulta Beauty (NASDAQ:ULTA) shares soared after the cosmetics retailer topped Wall Street estimates for its fiscal third quarter and raised its full-year outlook.
Victoria’s Secret (NYSE:VSCO) stock rose strongly after the lingerie retailer reported better-than-expected third quarter results, raising its full-year outlook as its turnaround strategy shows signs of success.
On the flip side, Hewlett Packard Enterprise (NYSE:HPE) stock slumped after the cloud services and hardware company missed analysts’ revenue expectations for the fourth quarter, posting $9.68 billion versus a consensus estimate of $9.94 billion.
Crude on track for weekly gains
Oil prices rose Friday, adding to the previous session’s gains as stalled diplomatic progress over the Ukraine war and firm expectations of a U.S. Federal Reserve rate cut supported sentiment.
Brent futures gained 0.9% to $63.85 a barrel, and U.S. West Texas Intermediate crude futures rose 0.8% to $60.15 a barrel.
Both contracts jumped nearly 1% on Thursday, and both are now on track for 1.5% weekly gains - a second straight week of increase.
The lack of progress in U.S.-Russia talks to end the Ukraine war has dampened hopes that energy sanctions on Russian crude could be eased soon, keeping a risk premium in the market.
Ayushman Ojha contributed to this article
