US stocks rise as investors assess signs inflation is coming down
US stocks extended its August rally on Friday as investors digested more signs that inflation is coming down.
Prices of imported goods fell 1.4% in July, representing the largest decline since April 2020.
Cooling inflation would give the Fed more flexibility in its interest rate hike trajectory.
US stocks jumped on Friday, with the S&P 500 extending its month-to-date gain to about 2% as investors assessed signs that inflation is cooling off.
Import prices fell 1.4% in July, exceeding economist estimates for a decline of just 1%. The decline in July import prices represents the biggest drop since April 2020. Meanwhile, export prices fell 3.3% in July.
The decline in prices has been in-part driven by the ongoing decline in oil prices and other commodities. A cool-off in inflation is seen as risk-on for the stock market because it would give the Federal Reserve more flexibility in slowing down its interest rate hike trajectory.
Here's where US indexes stood shortly after the 9:30 a.m. ET open on Friday:
S&P 500: 4,226.69, up 0.46%
Dow Jones Industrial Average: 33,485.80, up 0.45% (149.13 points)
Nasdaq Composite: 12,841.64, up 0.48%
One commodity price that continues to rise is European natural gas, which is on track for its fourth consecutive weekly gain as Russia's war with Ukraine continues to spark an energy crisis that could get worse heading into the winter months. Dutch TTF natural gas futures are up over 600% from a year earlier, according to ICE Exchange data.
In an attempt to limit the crisis from soaring natural gas prices, Europe is setting up floating liquefied natural gas terminals to better handle and process LNG imports.
Home prices have yet to see broad declines even as the housing market cools off due to higher mortgage rates. In fact, the median price for a single family home rose above $400,000 for the first time ever in the second quarter, according to the National Association of Realtors.
West Texas Intermediate crude oil fell 1.83% to $92.61 per barrel. Brent crude, oil's international benchmark, dropped 1.54% to $98.20. Bitcoin fell 0.85% to $23,834. Ether prices fell 1.41% to $1,879.
Gold rose 0.19% to $1,810.60 per ounce. The yield on the 10-year Treasury fell four basis points to 2.84%.
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