The S&P 500 gained about 0.24% at the opening bell to 7,688.99, while the Nasdaq Composite rose 0.36% to 26,892.80. The Dow Jones Industrial Average added roughly 0.15%.
The catalyst was August’s Personal Consumption Expenditures report. Headline PCE inflation rose 0.3% month over month, while core PCE, excluding food and energy, increased 0.2%. Annual core inflation stood at 3.0%, while headline inflation was 3.4%.
Treasury Yields Retreat as Fed Hike Odds Fall
The bond market delivered another boost to equities, with the 10-year Treasury yield pulling back after recently reaching levels last seen in 2007.
That matters particularly for growth stocks because higher bond yields raise the discount rate investors apply to future earnings. Treasury pressure has repeatedly weighed on Wall Street this month, even while an AI-driven rally helped the S&P 500 remain resilient.
Rate expectations also shifted after the inflation report, reducing some of the pressure created by expectations for another Fed hike.
The change follows a difficult stretch for equities in which rising oil prices and Treasury yields pressured the Dow, S&P 500 and Nasdaq at the same time.
Tech Stocks Lead, but Spending Remains Strong
Technology shares were among the early winners as lower yields improved the backdrop for long-duration growth stocks.
But the inflation report was not completely dovish. Consumer spending rose sharply in August, showing that demand remains strong despite restrictive borrowing costs. A resilient consumer can support corporate earnings, but it can also keep inflation sticky enough to prevent the Fed from moving quickly toward easier policy.
That leaves Wall Street with a familiar tension: softer inflation is helping stocks today, while elevated Treasury yields remain a meaningful risk.
The market has already shown how sensitive it is to that relationship. Earlier this month, the S&P 500 and Nasdaq staged a market rebound as oil prices and bond-market pressure eased.
