Indexes Rebound on Cooling New PCE Data

• Stocks staged a mild rebound after the core personal consumption expenditures index came in line with expectations.
• That leaves room for the Federal Reserve to cut this year.
• Interest rate cuts are also more likely, after the first-quarter GDP figures were revised lower.

US equities reversed this week’s streak of losses, rebounding mildly after the Federal Reserve’s favorite inflation gauge met expectations and showed signs of cooling on Friday.

The lack of surprises in the Personal Consumption Expenditures index was welcomed by investors, as it reinforced the odds of an interest rate cut this year. While indices rose, the 10-year Treasury yield fell over four basis points.

As forecast, core PCE rose 0.2% in April. On an annualized basis, it increased 2.8%, just above predictions of a 2.7% gain.

Earlier this week, first quarter GDP data was revised down on softer consumer spending, adding more reason for why the Fed may eventually have to cut interest rates down. Futures markets indicate at least one rate cut to occur as soon as September.

“The market has spent this year worried about inflation and there was a sigh of relief this morning when it wasn’t higher than expected and there may even be some good news in the report to the extent that a slowing in consumer spending could portend lower inflation numbers,” Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance, said.

Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Friday: 

Here’s what else happened today:

In commodities, bonds, and crypto: 

• Oil prices rose. West Texas Intermediate crude oil increased 0.82% to $78.28 a barrel. Brent crude, the international benchmark, gained 0.54% to $82.89 a barrel. 
• Gold climbed o.56% to $2,356 an ounce. 
• The 10-year Treasury yield slid four basis points to 4.51%.
• Bitcoin rose 0.5% to $68,709.