By Chibuike Oguh and Naomi Rovnick
Global stocks saw a slight increase in volatile trading on Friday, marking the fourth consecutive month of gains despite a period of heavy selling in early August. The rise was supported by positive U.S. economic data that helped the dollar recover from a weeks-long decline.
The U.S. personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure, rose by 0.2% in July according to data released by the Commerce Department on Friday. Consumer spending, which plays a significant role in the U.S. economy, increased by 0.5% last month, setting the stage for potential monetary policy easing by the Fed starting from September.
The Dow Jones Industrial Average closed up by 0.55% at 41,563.08, hitting a second consecutive record high. The S&P 500 gained 1.01% to 5,648.40 and the Nasdaq rose by 1.13% to 17,713.62. In Europe, the Stoxx index closed up by 0.09% and MSCI’s world share index increased by 0.77%, resulting in a 2.40% monthly gain.
The market’s recovery from the August sell-off was attributed to a “Goldilocks scenario” where the U.S. economy continues to grow without hindering potential interest rate cuts. The Fed is expected to implement a 25 basis point cut in September, with a possibility of a larger 50 bp reduction.
Government bonds rallied in early August following a weaker-than-expected U.S. jobs report and a surprise rate hike by the Bank of Japan. The yield on U.S. 10-year notes rose by 4.2 basis points on Friday to 3.909%, while the 30-year yield increased by 2.4 basis points to 3.9165%.
The dollar remained steady near a one-week high against a basket of major currencies, aiming to end a five-week losing streak. However, it was still on track for a monthly loss of around 2.5%. The euro declined by 0.2% to $1.105 due to softer-than-expected German inflation data.
Asian shares outside Japan rose by 0.48% and ended the month 2% higher. Oil prices fell, with West Texas Intermediate crude futures settling down by 3.11% to $73.55. Gold prices weakened but were on track for a 2.8% monthly gain.
