US Stocks Bounce Back on Steady Inflation Data

US stocks rebounded on Friday after a closely watched inflation report bolstered expectations for a Federal Reserve rate hike next week. The Dow and Nasdaq indices both closed 1% higher, while the S&P 500 gained 0.9%. Oil prices snapped an eight-session winning streak, falling 2.8% to $104.61 per barrel.

The headline US inflation rate held steady at 3.4% in August, matching July's reading and market forecasts. Core inflation, which excludes food and energy costs, eased to 2.4%. The data reinforced expectations of a rate hike, with the probability now at 90%, up from 70% before the report.

TD Securities noted that the Fed is likely to begin a hiking cycle in September after August CPI showed a lack of progress. The firm expects three total hikes in this cycle, with additional increases in October and January.