Good economic news boosted Wall Street’s main indexes on Wednesday, as a softer-than-anticipated inflation reading raised hopes that the Federal Reserve might not hike rates as soon as next month.
Inflation Report Highlights
A report from the Commerce Department revealed that the Personal Consumption Expenditures (PCE) price index stood at 3.4% on an annual basis in August, against estimates of 3.7%, according to economists polled by Reuters. This positive news contributed to a bullish sentiment in the market.
Economic Growth
Additionally, second-quarter GDP data showed that the US economy grew at a solid pace, driven by robust consumer spending and business investment related to the buildout of AI infrastructure.
““The market had been tracing out a bullish formation, meaning the price pattern suggested that any positive catalyst could trigger a move higher and that’s exactly what happened,” said Sam Stovall, chief investment strategist at CFRA Research.
Market Reactions
Traders now see a roughly 35% chance of an October rate hike, down from about 45%, according to data compiled by LSEG. The Federal Reserve is under pressure to cut rates from the White House after raising them earlier this month for the first time since 2023.
