Stock Market Indexes Rally on Cooler-Than-Expected Inflation Data

The stock market indexes rallied on Wednesday after inflation data came in lower than expected. The Nasdaq Composite rose 1.1% and the S&P 500 added 0.6%, while the Dow Jones Industrial Average finished flat.

Core PCE, the inflation gauge watched by the Federal Reserve, rose just 0.2% in August for an annual rate of 3%. Economists had forecast a 0.3% increase and an annual rate of 3.3%. The lower-than-expected inflation data pushed back the next expected interest rate hike from October to December.

The tech sector drove the rally, with Alphabet jumping 3.1% after signing a White House AI accord that includes audit commitments. Apple rose 2.4%, erasing Tuesday's drop, and Nvidia added 1.6%. Microsoft gained 1.9% and Amazon rose 2%.

However, the Dow's 30 components split 15 up and 15 down, with Caterpillar and Goldman Sachs falling roughly 1% each. The heavyweights canceled out everything Alphabet, Microsoft, and Apple put in.