US stocks rallied after a three-day skid following encouraging new inflation data.
The data boosted hopes that the Fed will start cutting interest rates by September.
The Nasdaq and S&P 500 have experienced weakness this week.
US stocks rose Friday morning, regaining momentum after three days of losses.
The bounce back follows June's personal consumption expenditures index, which mostly aligned with expectations and showed a moderate rise in consumer prices. Headline PCE rose 0.2% from May and 2.6% year-to-year.
The print helped bolster market convictions that the Federal Reserve can cut interest rates in September.
According to the CME FedWatch Tool, traders no longer expect rates to remain the same that month. Instead, investors indicated 87.7% odds of a 25-basis point cut, and 11.9% odds of a 50-basis point cut.
"Across most key categories, particularly housing inflation, the positive disinflationary momentum continues," Fitch Rating's head of US economic research Olu Sonola said. He added: "With one eye on recent labor market developments, the Fed is now likely to use the meeting next week to set the stage for a September rate cut."
These reinforced outlooks caused the Nasdaq 100 and S&P 500 to rise. This week, creeping doubt in large-cap tech stocks rally spurred investors to rotate out of the sector, pulling both indexes down 3.67% and 2.6% through the past week, respectively.
Treasury yields dipped Friday morning.
Here's where US indexes stood at the 9:30 opening bell on Friday:
S&P 500: 5,444.60, up 0.8%
Dow Jones Industrial Average: 40,494.55, up 1.4% (559 points)
Nasdaq composite: 17,284.29, up 0.6%
Here's what else is going on today:
Cutting interest rates now to stop a recession may already be too late, former Fed president says.
US labor has come close to a 'danger zone,' Claudia Sahm says.
Small caps will surge 15% next month alone, Fundstrat's Tom Lee said.
Weak housing market activity is weighing down on big-ticket housing appliances, Whirlpool says.
In commodities, bonds, and crypto:
Oil futures were down. West Texas Intermediate crude oil slid 0.51% to $77.89 a barrel. Brent crude, the international benchmark, was down 0.64% to $81.84 a barrel.
Gold gained 0.58% to $2,378.5 an ounce.
The 10-year Treasury yield fell three basis points to 4.218%.
Bitcoinrose 2.20% to $67,245.
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