US stocks gain as August PCE inflation slows to 3.4%, easing rate hike bets

Inflation data and interest rate expectations

On Wednesday, 30 September 2026, Wall Street recorded gains following new price data from the Commerce Department. The personal consumption expenditures (PCE) price index rose 3.4% on an annual basis in August 2026, coming in below the 3.7% forecast from economists polled by Reuters. Following the report, interest rate derivative pricing compiled by LSEG indicated that traders trimmed the probability of an October Federal Reserve interest rate increase from approximately 45% down to roughly 35%. The Federal Reserve had raised its benchmark interest rate earlier in September 2026, which was its first increase since 2023, drawing calls for rate cuts from the White House.

Morning market movements and quarterly performance

Equities responded positively to the inflation figures during morning trading. By 09:55 ET, the Dow Jones Industrial Average rose 50.58 points, or 0.10%, to 51,400.50. The S&P 500 added 33.17 points, or 0.43%, to reach 7,704.01, while the Nasdaq Composite advanced 193.57 points, or 0.72%, to 26,991.11. Five of the eleven S&P 500 sectors moved higher, with the information technology and energy sectors leading the advances. The gains placed the S&P 500 and the Nasdaq on track to finish the July to September quarter in positive territory, while the Dow ended the three-month period lower.

Sam Stovall, chief investment strategist at CFRA Research, described the market setup following the release of the Commerce Department figures.

The market had been tracing out a bullish formation, meaning the price pattern suggested that any positive catalyst could trigger a move higher and that's exactly what happened.

Labor market indicators and Treasury yields

Additional economic reports released on Wednesday pointed to continued activity in the domestic economy. Private payroll company ADP reported that US employers added 90,000 jobs in September 2026, beating consensus expectations and rising from the 36,000 private jobs added in August. The broad economy expanded during the second quarter, supported by steady consumer spending and corporate investments in artificial intelligence infrastructure. In debt markets, the yield on the 10-year US Treasury bond held at 5.246% after touching its highest level since June 2007 on Tuesday, marking seven consecutive sessions of upward yield movements for long-dated Treasuries.

Energy markets and geopolitical backdrop

Energy markets also exerted pressure on market sentiment throughout Wednesday. Crude oil prices moved upward, with the December contract for Brent crude futures recording gains. September trading took place alongside broader investor concerns over mounting debt, high energy costs, upcoming midterm congressional elections, and ongoing conflict involving Iran. While President Donald Trump stated that he rejected Tehran's latest peace proposal, Iranian Foreign Minister Abbas Araqchi stated that he had not received a formal rejection regarding a proposal to reopen the Strait of Hormuz within seven days of the lifting of US blockades. The US Labor Department is scheduled to release its monthly employment report on Friday.