S&P 500 ends higher as strong inflation data cements rate-hike bets

Wall Street experienced a rise on Friday, marking a contrast to the previous week's decline. Strong consumer price data fueled expectations of a Fed rate hike to combat inflation. Dell Technologies, an AI server maker, surged 12% to touch a record high, while HP Enterprise and HP also climbed by 12% and 8.4% respectively. These gains followed Oracle's quarterly results surpassing estimates, though Oracle's stock slipped by 1.8%.

The probability of a Fed rate increase at the upcoming policy meeting rose to nearly 90%, according to the CME FedWatch tool, up from 72% just a day prior. Thomas Martin, a senior portfolio manager, expressed confidence in the Fed's decision, stating it would help control inflation. The S&P 500 concluded the day at 7,656.98 points, marking a 0.86% increase, while the Nasdaq gained 0.96% to 26,333.04 points, and the Dow Jones Industrial Average rose 0.98% to 52,573.29 points.

Nine out of the eleven sector indexes within the S&P 500 saw an increase, led by communication services and consumer discretionary. Despite a relatively light trading volume of 14.0 billion shares, the CBOE Volatility Index, a measure of Wall Street's fear, dropped to 15.88. This rally came after recent market nervousness due to inflation concerns and rising long-term Treasury yields, along with worries about significant spending on AI data centers.

The S&P 500, which had fallen about 2% from its August 13 record high, is now up 12% for the year. The S&P 500's recent dip, combined with positive earnings outlooks, brought the benchmark's price-to-earnings ratio to 19 times, the lowest since April 2025. Oil prices retreated but remained around 9% higher for the week due to supply concerns from Middle East shipping route attacks.

One notable deal saw Copart being acquired by ACV Auctions for nearly $1.9 billion. Advancing stocks outnumbered declining ones by a ratio of 2.1-to-1, with the S&P 500 achieving eight new highs and nine new lows, while the Nasdaq recorded 45 new highs and 182 new lows.