Wall Street rallies as strong inflation data cements rate-hike bets

Wall Street rallied 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. US 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. Dell soared 11% to a record high, while Hewlett Packard Enterprise jumped 10% and HP gained 6.5% after Oracle's quarterly results topped estimates. Oracle dipped 0.5%. 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." The S&P 500 was up 0.99% at 7,666.77 points, while the Nasdaq gained 1.08% to 26,363.39 points, and the Dow Jones Industrial Average was up 1.08% at 52,625.63 points. The PHLX chip index jumped 2.39%, helped by a 2.6% increase in Advanced Micro Devices. Ten of the 11 S&P 500 sector indexes rose, led by communication services, up 1.69%, followed by a 1.35% gain in information technology. The CBOE Volatility Index, Wall Street's fear gauge, fell 2.2 points to 15.63. 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. The S&P 500's recent decline, coupled with a strong earnings outlook, has the benchmark trading at 19 times expected earnings, its cheapest since April 2025, when U.S. President Donald Trump's "Liberation Day" tariff announcements threw global markets into a tailspin.