U.S. stocks edged higher ahead of a key inflation report, with investors looking for confirmation that the Federal Reserve will cut interest rates next week.

At 09:35 ET (14:35 GMT), the Dow Jones Industrial Average gained 85 points, or 0.2%, the S&P 500 index gained 14 points, or 0.2%, and the NASDAQ Composite rose 102 points, or 0.4%.

PCE inflation gauge in spotlight

Expectations of 25-basis point reduction at the Federal Reserve's December 9–10 meeting are running hot -- with futures now pricing in roughly an 87% probability -- on the back of recent weak labor data and broader signs of economic cooling.

Thursday's weekly jobless claims plunged by 27,000 to a seasonally adjusted 191,000, the lowest level since September 2022, but economists cautioned that distortions tied to the Thanksgiving holiday may have exaggerated the decline.

Elsewhere, a private-sector payroll report from ADP on Wednesday showed a decline of 32,000 jobs -- the largest drop in over two and a half years, and a report by Challenger, Gray & Christmas stated that announced job cuts dropped sharply in November but hiring intentions remained weak.

While the importance of price stability, the second element of the Fed's dual mandate, has faded a little of late, all eyes are now on the release of the delayed monthly core inflation gauge, the Personal Consumption Expenditures Price Index (PCE), later in the session.

This is widely seen as the Fed's preferred inflation measure, and a soft PCE print could further embolden rate-cut expectations.

Excluding food and energy, the underlying, or "core," PCE price index is seen holding at 2.9% in the 12 months to September and 0.2% month-on-month.

Beyond PCE, the economic calendar will feature the latest survey of consumer sentiment from the University of Michigan.

Source : Investing.com