The S&P 500 inched higher on Friday, logging its fourth consecutive gain as investors assessed fresh inflation data that could strengthen the case for a Federal Reserve rate cut next week.
The benchmark index rose 0.19% to 6,870.40, leaving it just 0.7% below its intraday record. It also marked the S&P’s ninth positive session out of the last ten. The Nasdaq Composite advanced 0.31% to 23,578.13, while the Dow Jones Industrial Average added 104.05 points, or 0.22%, to finish at 47,954.99.
Markets digested a new round of economic reports Friday. The Commerce Department said core PCE, the Fed’s preferred inflation gauge, rose at an annual rate of 2.8% in September, slightly below the 2.9% expected. The monthly increase of 0.2% aligned with forecasts, as did the headline PCE figures. Meanwhile, the University of Michigan’s consumer sentiment survey for December came in stronger than anticipated.
The PCE data offers the Fed its final inflation snapshot ahead of Wednesday’s policy meeting. While inflation has softened, attention has shifted toward the labor market following recent signs of cooling. Investors hope this mix of data will push the Fed toward a quarter-point rate cut when it announces its decision.
Market pricing reflects those expectations: traders now assign an 87% probability of a rate cut next week, according to the CME FedWatch tool. The federal funds rate currently sits in a 3.75%–4% target range, near the upper bound amid tightness in short-term funding markets.
Despite the optimism, some analysts question whether a rate cut will propel equities much higher as year-end approaches. Even so, they say the market remains on solid footing, with enough momentum for the S&P 500 to potentially notch new highs.
All three major indexes ended the week stronger: the S&P 500 gained 0.3%, the Nasdaq added nearly 1%, and the Dow advanced 0.5%.
In corporate news, Netflix shares were volatile Friday after the company announced a $72 billion deal to acquire Warner Bros. Discovery’s film and streaming assets, a transaction expected to finalize within 12 to 18 months. Netflix slipped nearly 3%, while WBD surged more than 6%
