Wall Street ended higher on Friday as oil prices retreated and strong consumer price data reinforced expectations the Federal Reserve will raise interest rates next week to fight inflation. The TSX was also higher, although the pullback in crude oil prices translated into underperformance against major U.S. indexes.
U.S. consumer prices accelerated last month as the cost of gasoline rebounded after two straight monthly declines, adding pressure on the Fed to tighten monetary policy to fight inflation.
Interest rate futures now reflect a nearly 90% probability that the central bank will raise rates at its policy meeting on Wednesday, according to the CME FedWatch tool. That is up from a 72% likelihood on Thursday.
“That’s pretty much as close to a slam dunk as you’re going to get,” said Thomas Martin, senior portfolio manager at GLOBALT Investments in Atlanta. “The Fed will do the right thing and raise rates, and that is good at the margin for keeping inflation in check.”
Douglas Porter, chief economist at BMO Capital Markets, called Friday’s stock gains “a small relief rally.”
“In part, this reflected a modest late-week pullback in oil prices ... but it also may partly reflect the view that with the Fed now most likely to start tightening again, the medium-term outlook for inflation may be less fraught,” Porter said.
The benchmark U.S. 10-year Treasury yield briefly touched 4.9915%, but overall was steady in Friday’s trading session.
Oil prices fell but remained up around 9% for the week as attacks along Middle East shipping routes stoked concerns about prolonged supply disruptions. Brent crude futures slipped almost 3% on Friday but were still above $104 a barrel. U.S. crude oil futures settled 2.4% lower at $100.05 a barrel. Those price declines came after a report that foreign ministers in the Middle East are trying to work out a temporary deal with Iran to manage shipping through the Strait of Hormuz.
The S&P 500 climbed 0.86% to end the session at 7,656.98 points. The Nasdaq gained 0.96% to 26,333.04 points, while the Dow Jones Industrial Average rose 0.98% to 52,573.29 points.
The S&P/TSX Composite Index ended up 191.21 points, or 0.54%, at 35,697.49, after hitting its lowest closing level in nearly six weeks on Thursday. For the week, the index was down 2.2%, its fourth straight weekly decline and the steepest since March.
The TSX technology sector rose 3.6%, with shares of electronic equipment company Celestica gaining 6.6%. Industrials added 0.7% and heavily weighted financials ended 0.6% higher. The materials group, which includes metal mining shares, was up 1.1%. Four of the 10 major sectors ended lower, including energy. It was down 0.7%.
On Wall Street, AI server maker Dell soared 12% to a record high. Hewlett Packard Enterprise jumped 12% and HP gained 8.4% after Oracle’s quarterly results topped estimates. Oracle dipped 1.8%.
Nine of the 11 S&P 500 sector indexes rose, led by communication services, up 1.35%, followed by a 1.13% gain in consumer discretionary.
Volume on U.S. exchanges was relatively light, with 14.0 billion shares traded, compared with an average of 14.9 billion shares over the previous 20 sessions. The CBOE Volatility Index, Wall Street’s fear gauge, fell 2 points to 15.88.
Friday’s rally follows recent nervousness on Wall Street related to inflation and rising long-term Treasury yields, as well as concerns about massive spending to build AI data centers. The S&P 500 is down about 2% from its record-high close on August 13, and it remains up 12% in 2026.
For the week, the S&P 500 dipped 0.8% and the Nasdaq lost 0.7%.
The S&P 500’s recent decline, coupled with a strong earnings outlook, has the benchmark trading at 19 times expected earnings. That is its cheapest since April 2025, when U.S. President Donald Trump’s “Liberation Day” tariff announcements threw global markets into a tailspin.
Shares of ACV Auctions soared 44% after online vehicle auctioneer Copart agreed to buy it in a nearly US$1.9 billion deal.
Advancing issues outnumbered falling ones within the S&P 500 by a 2.1-to-one ratio.
The S&P 500 posted eight new highs and nine new lows; the Nasdaq recorded 45 new highs and 182 new lows.
Reuters, Globe staff