Friday, U.S. equities rallied after the in‑line PCE print helped calm immediate worries that inflation was re‑accelerating; the market shrugged off a run of tariff headlines and recession chatter and pushed indexes higher. Major averages snapped a three‑day skid as investors leaned on the idea that the Fed's easing path remains intact.
Market action: the S&P 500, Dow and Nasdaq all posted modest gains on the session, with breadth positive across most sectors — a risk‑on tone that lifted cyclical names alongside defensives. Traders continue to price significant odds of a rate cut at the Fed’s October meeting, per futures markets.
Fixed income: front‑end rates eased modestly after the print, compressing the 2‑year yield while the 10‑year sat higher in parts of the day; the yield curve remains a key market signal for how many cuts investors expect and when. Use the CME FedWatch tool to track shifting probabilities priced into futures.
Stock movers and flow notes: tariff beneficiaries (like truck makers) jumped on trade relief expectations while some AI‑linked names — including Nvidia and Oracle — felt pressure amid profit‑taking on the AI trade. Retail and consumer sentiment data that lag PCE can still move near‑term positioning, so expect episodic rotation between growth and cyclicals into month‑end.
