Major US stock indices closed higher on Friday as crude oil prices retreated, even as expectations grew for Federal Reserve interest rate hikes following US inflation data. The Dow Jones Industrial Average climbed 509.19 points, or 0.98 percent, to finish at 52,573.29, while the S&P 500 rose 0.86 percent to 7,656.98 and the Nasdaq Composite added 0.96 percent to 26,333.04.
Energy pullback eases pressure
The daily gains came alongside a decline in energy markets after crude oil prices surged earlier in the week due to rising tensions in the Middle East. West Texas Intermediate crude futures fell 2.4 percent to settle at $100.05 a barrel, while Brent crude futures declined 2.8 percent to $104.61 a barrel.
Despite Friday’s drop, crude posted steep weekly gains. WTI rose 10 percent over the week. Brent gained 9 percent across the same period. For equity benchmarks, the Friday rebound failed to erase earlier weekly losses, leaving the Dow down 1.6 percent, the S&P 500 lower by 0.8 percent, and the Nasdaq down 0.7 percent on the week.
Inflation lifts policy expectations
Macroeconomic concerns centered on consumer price data for August, which showed the US Consumer Price Index rose 0.4 percent month-on-month and 3.4 percent year-on-year, while the core measure rose 0.3 percent on the month. Yields on 2-year US Treasury bonds breached 4.6 percent, touching their highest level since July 2024.
Traders placed an 86 percent probability on a 25 basis point Federal Reserve rate hike next week, according to the CME Group FedWatch tool. “The debate has quickly shifted from whether the Fed will raise rates to the more important question of how many rate hikes will ultimately be needed in this cycle,” said Seema Shah, Chief Global Strategist at Principal Asset Management, speaking to CNBC. Shah noted that with inflation remaining above target for half a decade, policymakers are likely to conclude that more than one rate hike is needed to restore price stability.
Data: S&P Dow Jones Indices · FRED — St. Louis Fed · Nasdaq
