Wall Street Rebounds as Cooler Inflation Calms Markets

Wall Street stocks soared and the dollar softened as lower-than-expected inflation data eased worries about a government shutdown and U.S. tariff threats. The Fed signaled a slower pace of rate cuts, causing market jitters. Meanwhile, gold surged, and Treasury yields eased from highs.

Wall Street stocks soared on Friday as investors welcomed cooler-than-expected inflation data, alleviating fears over a potential government shutdown and new tariff threats from U.S. President-elect Donald Trump. The dollar softened and gold surged, while Treasury yields eased back from recent highs.

The Commerce Department reported that the PCE price index, the Federal Reserve's preferred inflation measure, was lower than anticipated, suggesting price growth is on track to meet the central bank's 2% target. "The PCE report at a lower inflation level is good news," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder.

Despite a busy week for central banks, led by the U.S. Federal Reserve's announcement of a slowed pace for interest rates, equity markets faced pressure. Washington's lawmakers also struggled to raise the debt ceiling and avoid a partial government shutdown, adding to market uncertainties.