The S&P 500 edged up 0.6%, closing at 4,500 points, while the Dow Jones Industrial Average added 84 points, a 0.2% gain, and the Nasdaq Composite rose 1%.
The rise was buoyed by a 0.6% jump in inflation‑adjusted personal spending in August, the fastest pace in 13 months, exceeding the 0.5% forecast.
Core personal consumption expenditures (PCE) rose 0.2% month‑on‑month, below the 0.3% estimate, and 3% YoY, down from 3.3% expected, keeping headline PCE at 0.3% and 3.4% YoY, both shy of the 0.4% and 3.7% forecasts.
The U.S. merchandise‑trade deficit widened 11.5% to $132.6 billion, the largest since early 2025, driven by a 5.5% rise in imports, including a 16.6% surge in industrial supplies.
Fed officials are likely to pause rate hikes for now, as the 0.2% core PCE reading suggests inflation is cooling below the 2% target, but the year‑over‑year 3.4% headline PCE still signals persistent pressure.
Market participants will focus on next week’s CPI release and Q3 earnings, with technology and consumer discretionary stocks poised for potential upside if inflation trends continue to weaken.