• Stocks climbed and the Fed’s preferred inflation gauge was in line with expectations
  • Excluding food and energy, the PCE price index increased 0.4% month-over-month in January.
  • The reading should boost the outlook for Fed rate cuts, as inflation doesn’t look to be reaccelerating.

US stocks climbed Thursday as investors took in fresh inflation data for January.

The US Department of Commerce reported that the personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, climbed 0.3% month-over-month and 2.4% compared to the same time last year. Both figures matched consensus estimates.

Core PCE, which excludes the more volatile food and energy costs, climbed 0.4% from December to January, and 2.8% compared to a year ago.

The fact that inflation doesn’t appear to be reaccelerating should boost the outlook for looser monetary policy.

In a note after the data release, Capital Economics’s chief North America economist Paul Ashworth said the figures were no surprise following the hot CPI and PPI reports, and it contributes to the case for pushing interest rate cuts back.

And given that first-quarter GDP growth is on track to hit between 2.5% and 3.0%, he said the Fed's preferred inflation gauge doesn't change the broader narrative.

Richard de Chazal of William Blair said that "adverse weather in January has been creating a lot of noise in the economic data for the month we have seen so far, whether it's the retail sales figures or the industrial production numbers," adding that "it is also likely today's personal income and spending data was similarly impacted."

"Nevertheless," he said, "it continues to look as though both consumer spending and income growth are decelerating, even outside this noise."

Here's where US indexes stood as the market opened at 9:30 a.m. on Thursday: 

Here's what else is going on: 

In commodities, bonds, and crypto: 

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