S&P 500 Index, NASDAQ Composite Rise Following Tame PCE Inflation Report

The October Core Personal Consumption Expenditures Index rose 0.2%, below the consensus estimate of 0.3% collected from economists by Dow Jones. Annual PCE inflation dropped slightly to 5.0% from 5.1%.

Personal Income in October rose 0.7%. Greater than the 0.4% forecast and previous reading.

Personal Spending rose 0.8%, matching the estimate.

In other news, Weekly Unemployment Claims came in at 225K, lower than the 234K forecast and previous week’s reading.

Traders are now bracing for the latest ISM Manufacturing PMI report, due to be released at 15:00 GMT. It is expected to show a contraction to 49.7, down from 50.2.

Market Reaction

The benchmark S&P 500 Index and the tech-heavy NASDAQ Composite surged after the release of the economic data as the news reaffirmed Federal Reserve Chairman Jerome Powell’s comments from Wednesday that indicated inflation had pulled back enough to warrant a slowdown in the pace of future Fed rate hikes.

Treasury yields fell on the news, weakening the U.S. Dollar and making dollar-denominated gold a more attractive investment. Gold hit a three-month high.