Stocks rise as traders weigh US inflation, Trump tariffs

Stocks climbed on Friday as investors digested a new tariff blitz by US President Donald Trump and data showing a key US inflation metric rose in line with expectations.

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Wall Street opened higher after slumping for three straight sessions over concerns that the US Federal Reserve might reconsider more interest-rate cuts.

Official data showed that the Fed’s preferred gauge of inflation, the personal consumption expenditures (PCE) price index, reached 2.7 percent in August, up from 2.6 percent in July.

The figure is above the central bank's two-percent inflation target.

But it was in line with analyst forecasts, giving investors “some relief ... that the Fed will remain on track to cut rates two more times this year”, said Bret Kenwell, US investment analyst at eToro trading platform.

The Fed must weigh between fighting inflation and propping up a weakening US jobs market, Kenwell said. “The Fed’s two percent inflation target seems to be a low priority right now,” he said.

Instead, he added, it's “trying to restore balance between the weakening labour market and rising inflation, hoping to find a happy medium on both sides of its dual mandate”.

Official data Thursday showing faster-than-expected US economic growth in the second quarter had slightly dampened expectations of a Fed cut next month, which would follow on from its September reduction, the first this year.

Investors were also digesting Trump's latest tariffs move.