US stocks rose Friday as investors looked to recover from four consecutive sessions of declines, with easing oil prices helping sentiment.
The Dow Jones Industrial Average rose 520 points, or 1%, while the S&P 500 gained 0.9% and the Nasdaq Composite advanced 0.8%.
The rebound came after the major averages posted four straight daily declines.
For the Dow, it marked the longest losing streak since late April.
Oil prices retreat from weekly surge
Crude prices pulled back after a sharp rally earlier in the week triggered by escalating tensions in the Middle East.
West Texas Intermediate futures fell 3% to $99.28 a barrel, while Brent crude futures declined 3.1% to $104.32.
Despite Friday’s declines, both contracts remained on track for weekly gains of about 8%.
The retreat below the psychologically important $100 level for WTI helped ease some of the immediate pressure on stocks.
Oil prices have become a major source of concern for investors as the prolonged conflict between the US and Iran raises the risk of further supply disruptions and higher energy costs.
CPI lifts Fed rate-hike expectations
The market rebound came despite a mixed August consumer price index report that strengthened expectations for tighter monetary policy.
The consumer price index rose 0.4% on a seasonally adjusted basis in August, bringing the annual increase to 3.4%, according to the Bureau of Labor Statistics.
Both figures matched Dow Jones estimates.
Core CPI, which excludes volatile food and energy prices, rose 0.3% from the previous month, 0.1 percentage point above expectations.
The annual core inflation rate was 2.4%, in line with forecasts.
The report was the final major inflation reading available to the Federal Reserve before its policy meeting next week, which concludes Wednesday with a decision on interest rates.
Traders responded by sharply increasing their expectations for a 25-basis-point rate hike.
The probability of an increase rose to around 90%, according to CME Group’s FedWatch tracker, from lower levels before the report.
Energy was a major contributor to the headline increase. Gasoline prices jumped 3.9%, accounting for more than one-third of the overall CPI gain.
The broader energy index increased 2.1% during the month and was up 16.3% from a year earlier.
Food prices edged up 0.1%, while food-at-home prices were unchanged. The food index was 2.7% higher than a year earlier.
Investors look beyond higher rates
The combination of higher oil prices and renewed rate-hike expectations has created a difficult backdrop for equities this week, particularly for growth and technology stocks that are sensitive to borrowing costs.
Friday’s decline in crude prices offered some relief, allowing investors to look beyond the immediate pressure from the inflation data.
Wells Fargo Investment Institute analysts also argued that recent market weakness may not prevent stocks from advancing through the remainder of the year.
September is traditionally a weak month for equity returns, but the firm said recent profitability and capital expenditure trends point toward further gains.
“We believe investors will look beyond the uncertainties of higher interest rates, elevated oil prices and midterm elections to focus on continued economic growth and robust earnings through year-end and into 2027, supporting higher stock prices,” Douglas Beath of Wells Fargo said.