Stocks Gain Ground As PCE Price Index Reports Show That Inflation Is Under Control

Traders Cheer The New $1.2 Trillion Infrastructure Plan

S&P 500 futures are gaining ground in premarket trading as traders look ready to buy stocks at higher levels after U.S. President Joe Biden stated that a bipartisan deal on the infrastructure plan was reached.

Moderate senators from both parties managed to come up with an infrastructure plan worth $1.2 trillion. This plan is not expected to increase taxes, which is another positive development for the stock market.

The plan is focused on physical infrastructure and excludes Democrats’ social priorities, and it remains to be seen whether it will easily pass the vote. Yesterday, infrastructure-related stocks gained solid upside momentum, and they look ready to continue this upside move at the start of today’s trading session.

Personal Consumption Expenditure Price Index Grew By 3.9% Year-Over-Year In May

U.S. has just reported that Personal Consumption Expenditure (PCE) Price Index increased by 0.4% month-over-month in May compared to analyst forecast which called for growth of 0.8%.

On a year-over-year basis, PCE Price Index increased by 3.9% compared to analyst forecast of 4.2%. Core PCE Price Index grew by 3.4% year-over-year, in line with the analyst consensus.

These reports are bullish for stocks as they show that inflation at the consumer level is not rising as fast as previously expected, so the Fed will not have to rush to raise rates. Not surprisingly, S&P 500 futures got a boost after the release of PCE Price Index data.

Personal Income Declined By 2% In May

U.S. has also released Personal Income and Personal Spending reports. Personal Income declined by 2% month-over-month in May compared to analyst consensus which called for a decline of 2.5%.

Personal Spending remained unchanged while analysts expected that it would grow by 0.4% on a month-over-month basis.

Later, traders will have a chance to take a look at the final reading of Consumer Sentiment report for June. Analysts expect that Consumer Sentiment increased from 82.9 in May to 86.5 in June.

For a look at all of today’s economic events, check out our economic calendar.