US stocks close higher on reassuring economic data

NEW YORK, United States — Wall Street rallied Friday with all three main indices solidly in the green -- and the Dow closing at another record -- after inflation data that added to expectations of upcoming interest rate cuts.

The Dow Jones Industrial Average added 0.6 percent to 41,563.08 while the broad-based S&P 500 bounced by 1.0 percent to 5,648.40.

The tech-rich Nasdaq Composite Index advanced 1.1 percent to 17,713.62.

This came after the personal consumption expenditures (PCE) price index held steady in July on an annual basis, reassuring analysts who were eyeing the inflation gauge for its bearing on the Federal Reserve's next monetary policy decision.

The PCE price index rose slightly from a month ago to 0.2 percent in July, and held at 2.5 percent on-year.

With spending still resilient according to the same report by the Commerce Department early Friday, economists said it was likely the central bank can lower rates gradually -- barring any unwelcome surprises.

"Participation was light today, which makes sense in front of that three-day (Labor Day) weekend," said Patrick O'Hare of Briefing.com.

"That was helped along by good earnings news... and some pleasing economic data, which fed into the market's belief that the economy is still on track for a soft landing, and that the Fed is still on track to cut rates in September," he said.