Wall Street Opens Higher on Easing Inflation

NEW YORK (AP) -- Stocks rose on Wall Street Friday and headed for their fourth weekly gain following a closely watched report that showed inflation continues easing.

Investors are hoping that cooling inflation will prompt the Federal Reserve to start cutting interest rates, which remain at their highest level in more than 20 years.

The S&P 500 index rose 0.6% and is on track to notch a fourth straight weekly gain and a new all-time high. The Nasdaq composite rose 0.8% and is also on track to set a new record.

The Dow Jones Industrial Average rose 185 points, or 0.5%, as of 10:04 a.m. Eastern.

Consumer prices rose 2.6% in May compared with a year ago, according to the latest personal consumption expenditures index, or PCE. That signaled continued easing from a 2.7% reading in April and is sharply lower than the peak reading of 7.1% two years ago.

The PCE is the Fed's preferred measure of inflation and the latest reading is encouraging for economists and investors who are hoping for rate cuts to help ease pressure on the market and borrowers. Wall Street is betting that the Fed will start cutting interest rates at its meeting in September.

Treasury yields pulled back in the bond market following the latest signal of easing inflation. The yield on the 10-year Treasury, which influences interest rates on mortgages and other consumer loans, fell to 4.27% from 4.30% just prior to the release of the PCE data. The yield on the two-year Treasury, which more closely tracks expectations for Fed actions, fell to 4.67% from 4.72% just prior to the data's release.

Nike tumbled 18% after the shoe and athletic wear company missed Wall Street's revenue targets and cut its full-year sales guidance. Company executives said they expect sales to decline by single digits in the current fiscal year, citing a "challenging" environment.

Nike's dour outlook dragged other athletic apparel companies down with it. Foot Locker fell 4.2%, Skechers lost 1.6% and Under Armour was down 2.4%.