Stocks waver as investors weigh inflation data

Giraffes along waterhole with reflection in Kruger National Park, South Africa.
Avbob Investment Plan
NEW YORK – European stock markets wobbled on Friday but Wall Street rallied as investors digested inflation figures that raised the prospect of interest rate cuts in the two major economies next month.
Paris closed 0.1 percent lower while Frankfurt and London were marginally in the red after the indexes were in the green for most of the day.
In New York, the Dow closed at a new record while the broad-based S&P 500 index and the tech-heavy Nasdaq also rose.
Official data on Friday showed the US Federal Reserve’s favored measure of inflation — the personal consumption expenditures (PCE) price index — held steady on an annual basis in July at 2.5 percent.
It edged up on a monthly basis from 0.1 percent in June to 0.2 percent in July.
The figures were in line with market forecasts, raising expectations that the Fed will cut rates when it meets on September 17-18.
“It’s another reassuring inflation report for a Fed that’s looking to lower interest rates at its mid-September meeting,” said Bret Kenwell, US investment analyst at eToro trading platform.
“It would have taken a scorching hot inflation report for the Fed to reverse course on a rate cut now,” Kenwell said.
The only doubt now is the size of the reduction.
Analysts expect a cut of 0.25 percentage points, but some say it could be bigger if jobs data next week shows weakness in the labor market.
“There are still concerns about the jobs market. Another big miss could increase speculation of a 50 basis point cut,” Kenwell said.
Oil prices, meanwhile, fell after Reuters reported that OPEC is set to proceed with a planned oil output increase from October. The report comes amid concerns about Libyan supply disruptions.