By Johann M Cherian and Lisa Pauline Mattackal
(Reuters) - The benchmark S&P 500 and the blue-chip Dow inched up in choppy trading on Friday, after data showed inflation rose largely in line with expectations in April, fanning hopes that rate cuts were imminent from the Federal Reserve this year.
A Commerce Department report showed the Personal Consumption Expenditure index, the Fed's preferred inflation gauge, rose 0.3% in April, in line with analysts' estimates and unchanged from the previous month. Annually, it was at 2.7%, also meeting expectations, while the so-called core PCE rose 0.2% on a monthly basis, slightly softer than an expectation of 0.3%.
Megacap growth names such as Apple (NASDAQ:AAPL) and Nvidia rose 0.34% and 1.4%, respectively, as U.S. bond yields slipped after the data. [US/]
The S&P 500's tech sector rose 0.3%, recovering from the previous session's 2.4% loss, while the rate-sensitive utilities and real estate sectors also climbed.
Expectations for a September rate cut climbed to over 50%, compared with 48.7% seen before the data. The odds had stayed below 50% for most of the week, according to the CME FedWatch tool.
"We shouldn't go overboard. What we've got is after a few months of rising, (inflation) is finally going sideways and hopefully we'll resume a downtrend as we go forward... but markets will be relieved because they are living in fear of bad numbers at the moment," said Marc Ostwald, chief economist and global strategist at ADM Investor Services International.
However, both the tech-heavy Nasdaq and S&P 500 remain on track for their first weekly losses in six, as a spike in Treasury yields pressured riskier assets, an almost 20% plunge in Salesforce shares on Thursday dragged the benchmark index to its lowest in two weeks.
Comments from Atlanta President Raphael Bostic, a Federal Open Market Committee voting member, are also expected later in the day.
At 9:46 a.m. ET, the Dow Jones Industrial Average was up 112.46 points, or 0.30%, at 38,223.94, the S&P 500 was up 16.30 points, or 0.31%, at 5,251.78, and the Nasdaq Composite was up 27.10 points, or 0.16%, at 16,764.18.
Among big movers, Dell plunged 19% after it forecast current-quarter profit below market estimates and signaled that higher costs to build servers that meet heavy AI workloads would dent its annual margins.
Zscaler jumped 11.3% after the security solutions provider forecast fourth-quarter results above estimates.
Gap surged 19% after the apparel maker raised its annual sales forecast and its first-quarter results beat market expectations, in fresh signs that its turnaround strategy to bring in newer styles was starting to work.
Trump Media & Technology Group fell 4.8%. A New York jury convicted former President Donald Trump of falsifying documents to cover up a payment to silence a porn star ahead of the 2016 election.
Advancing issues outnumbered decliners by a 5.16-to-1 ratio on the NYSE, and by a 2.86-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and four new lows, while the Nasdaq recorded 27 new highs and 22 new lows.