US Department of Commerce on Friday released the latest Personal Consumption Expenditures (PCE) price index for January, showing a monthly increase of 0.3% and an annual increase of 2.5%. The core PCE, excluding food and energy, also increased by 0.3% monthly and 2.6% annually, in line with market expectations, easing concerns about a resurgence of inflation and providing room for the Federal Reserve to cut interest rates.
Many analysts believe that although the rate cut may still be a few months away, this inflation data has provided support for one to two rate cuts in 2025. Robert Ruggirello, Chief Investment Officer of Brave Eagle Wealth Management, stated:
Although further rate cuts may still be a few months away, we believe this inflation data helps retain the possibility of one or two rate cuts in 2025. We believe inflation is a problem of the past, and future data will continue to improve.
Federal Reserve officials had previously stated that they would focus on the data released in the coming months and assess the actual economic impact of policies such as Trump's tariffs. It is currently unclear to what extent these tariffs will be passed on to consumers and how they will more broadly impact economic growth.
US stocks rise across the board
Stimulated by the slight easing of the inflation indicator, US stocks rose across the board on Friday after a big drop on Thursday:
- The Dow Jones Industrial Average rose 601.41 points or 1.39% to close at 43,840.91.
- The S&P 500 index rose 92.93 points or 1.59% to close at 5,954.5.
- The Nasdaq Composite index rose 302.86 points or 1.63% to close at 18,847.28.
- The Philadelphia Semiconductor Index rose 79.99 points or 1.71% to close at 4,766.75.
Bitcoin rebounds to $85,000
Meanwhile, the price of Bitcoin has also rebounded significantly. After falling to a low of $78,258 on Friday, the lowest since November last year, Bitcoin began to rebound, reaching a high of $85,120 in the early hours of the morning. As of the time of writing, it is trading at $84,408, up 2.1% in the last 24 hours.
According to CoinGecko data, major Altcoins have also broadly recovered in the last 24 hours, with Ethereum up 1.5%, XRP up 3.1%, and SOL up over 13% due to CME Group's announcement that it will launch Solana futures on March 17.
