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Traders add to Fed rate cut bets as inflation eases

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Nike ( NKE ) slumps after results

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Infinera ( INFN ) rises after Nokia to buy company

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Indexes: Dow 0.34%, S&P 0.30%, Nasdaq 0.24%

(Updated at 9:43 a.m. ET/1343 GMT)

By Ankika Biswas and Lisa Pauline Mattackal

June 28 (Reuters) -

U.S. stocks rose broadly on Friday after an in-line

inflation report strengthened hopes for interest rate cuts in

September, though Nike ( NKE ) shares slumped after a dismal annual

sales forecast.

The Commerce Department's data showed

personal consumption expenditures

(PCE) price index - the Fed's preferred inflation gauge -

was unchanged on a monthly basis in May and rose 2.6% annually,

all along expectations.

Excluding the volatile food and energy components, the

core figure increased 0.1% month-on-month and 2.6% annually.

Chances of a

rate cut in September

inched up to 68% from 61% before the data, as per LSEG

FedWatch data.

"This is a perfect report - it gives the Fed the green

light to cut in September, and sets the stage for the dovish

rhetoric to continue," said Jay Woods, chief global strategist

at Freedom Capital Markets.

Traders held their bets of two cuts despite Fed

projections of just one this year, hoping for a sustained

downtrend in inflation and as the economy remains susceptible to

decades-high interest rate.

Megacaps including Apple, Nvidia ( NVDA ), and

Amazon.com ( AMZN ) rose between 0.2% and 1.2%.

Most of the S&P 500 subsectors were higher, led by tech

stocks. The small-cap Russell 2000 rose 0.8% to

an over two week-high.

However, Nike ( NKE ) slumped 17.1% after forecasting a

surprise drop in fiscal 2025 revenue, weighing on the broader

consumer discretionary sector.

At 9:43 a.m. ET, the Dow Jones Industrial Average was

up 133.28 points, or 0.34%, at 39,297.34, the S&P 500 was

up 16.64 points, or 0.30%, at 5,499.51, and the Nasdaq Composite

was up 42.09 points, or 0.24%, at 17,900.77.

Richmond Fed President

Thomas Barkin

said he still wanted to proceed "deliberately" on policy

and the Fed's

Mary Daly

said the latest data was "good news that policy is

working."

Comments from Fed official Michelle Bowman is also

expected during the day.

Investors also geared up for the final reconstitution of the

Russell benchmark indexes during the day, with the furious rally

in AI-related stocks expected to leave an outsized imprint on

their final shape.

Both the S&P 500 and the Nasdaq were set for gains in a

week marked by a short-lived rout in AI-related stocks,

Amazon.com ( AMZN ) hitting $2 trillion market value for the first time,

quarterly earnings from the likes of FedEx ( FDX ) and Micron

Technology ( MU ), and a mixed bag of economic data.

The two indexes were set for quarterly gains. However

the blue-chip Dow was on pace to end the quarter down 1%,

highlighting the divergence between the more tech-heavy indexes

and the rest of the market.

Trump Media & Technology Group ( DJT ) gained 4% after a

shaky performance from Democratic incumbent Joe Biden in the

first presidential debate.

Optical networking gear maker Infinera ( INFN ) jumped

18.4% after Nokia said it would

acquire

the company in a $2.3 billion deal.

Advancing issues outnumbered decliners by a 4.16-to-1

ratio on the NYSE. Advancing issues outnumbered decliners by a

2.18-to-1 ratio on the Nasdaq.

The S&P index recorded 12 new 52-week highs and one new low,

while the Nasdaq recorded 35 new highs and 38 new lows.