Wall Street’s main indices opened higher on Friday, after the latest inflation data came in line with expectations, easing concerns that persistent price pressures could delay interest rate cuts by the Federal Reserves.
In the early hours of trading, the Dow Jones Industrial Average rose 154.1 points, or 0.34% to 46,101.45. S&P 500 rose 10.7 points, or 0.16%, to 6,615.38, while the Nasdaq Composite rose 18.6 points, or 0.08%, to 22,403.273.
US consumer spending rose 0.6% in August, exceeding expectations, following a 0.5% increase in July. This uptick in spending supports the economy as the third quarter progresses.
Consumer spending, which accounts for more than two-thirds of economic activity, has remained resilient despite a slowdown in job growth.
While the labour market has shown signs of weakness in recent months, particularly with less job creation, high-income households continue to drive spending. This is largely due to stable stock market performance and elevated home prices.
However, the benefits of rising consumer spending are not universal. Lower-income households are facing increased financial pressure due to higher prices, particularly from goods affected by import tariffs.
The situation may worsen with impending reductions in federal food assistance programs, which could further strain already tight household budgets.
Strong consumer spending played a key role in the 3.8% annualised GDP growth in Q2 2025, marking the fastest pace of expansion in nearly two years. For Q3, growth estimates are now around 2.5%.
On the inflation front, the Personal Consumption Expenditures (PCE) Price Index rose by 0.3% in August, pushing the annual inflation rate to 2.7%. Excluding food and energy, core inflation held steady at 2.9%, the same as in July.