US stocks moved higher on Friday as a retreat in oil prices helped ease some of the pressure on markets, and fresh inflation data came broadly in line with expectations.The S&P 500 gained 1%, putting the index on course to end a four-day losing run, its longest since June. The Dow Jones Industrial Average rose 479 points, or 0.9%, while the Nasdaq composite advanced 1.2%.The improvement came after oil prices pulled back from their recent surge. Brent crude, the international benchmark, had approached $110 overnight before falling 2.5% to $104.93 a barrel. Oil had recently climbed to its highest level since May amid the ongoing war with Iran.Inflation remains high, but close to expectationsThe easing in oil prices offered some relief as investors digested the latest US inflation figures.A report released on Friday showed that prices paid by US consumers for gasoline, food and other living costs were 3.4% higher last month than a year earlier. While inflation remains too high, the reading was close to economists’ expectations and what Wall Street had been prepared for.The figures also reinforced expectations that the Federal Reserve will raise its main interest rate at its meeting next week.Higher interest rates are used by the Fed to tackle inflation by making borrowing more expensive through the bond market. This can slow economic activity and reduce the forces driving further price increases.Expectations of a rate increase pushed the yield on the two-year Treasury to 4.60% from 4.56% late Thursday. The two-year yield tends to move in response to expectations about upcoming Fed policy.Longer-term borrowing costs moved lower, however. The yield on the 10-year Treasury fell to 4.93% from 4.95% late Thursday, suggesting bond investors may see future rate increases as helping keep inflation under control over the longer term.Fed faces inflation and confidence concernsEconomists said rate increases could help address concerns over the Federal Reserve’s commitment to bringing inflation down. Questions about the central bank’s credibility had grown earlier in the summer, including whether it would take the steps required to control prices even if that caused short-term economic pain.The inflation picture was accompanied by another concern for policymakers, weakening consumer confidence.A preliminary University of Michigan report showed US consumer sentiment falling on Friday, with declines among both Democrats and Republicans. Consumers’ expectations for inflation over the coming year rose to 4.6% from 4% last month.That was the highest reading since June and is a concern for the Fed and economists because rising inflation expectations can set off a cycle of behaviour that makes inflation worse.The recovery was not uniform across global markets.European stocks moved higher as oil prices eased. London’s FTSE 100 gained 0.5% after a report showed the UK economy was stronger in July than economists had expected.Asian markets moved in the opposite direction. Japan’s Nikkei 225 fell 1.9%, while South Korea’s Kospi declined 1.8%.
