Volkswacht Bodensee - US stocks rise on inflation report as Nasdaq hits record

The personal consumption expenditures (PCE) price index -- the US central bank's favored measure of inflation -- rose at an annual rate of 2.4 percent in January, down from 2.6 percent in December, the Department of Commerce said.

A slowing headline inflation number could encourage the Federal Reserve to start cutting interest rates from their 23-year high sooner rather than later.

But the closely watched "core inflation" measure, which strips out volatile food and energy costs, increased by 0.4 percent from a month earlier, indicating an uptick in underlying inflation from December to January.

Still, the tech-focused Nasdaq Composite Index set a new record, surging 0.9 percent to surpass a 2021 high -- while the two other major US indices logged gains as well.

Investors had started the trading day "very worried about the PCE," nervous that the inflation measure could come in hotter than expected, said Steve Sosnick of Interactive Brokers.

"But it came in as expected and we ended up with a decent rally," he added. "It's a bit of a relief rally."

Yet, the "collective sigh of relief" from financial markets is masking evidence that shows the disinflation trend is slowing, which could keep the Fed on pause for some time, said Kathleen Brooks, research director at XTB.

Expectations for rate cuts had already shifted to later this year after data showed inflation in the world's biggest economy was stubbornly above the Fed's target.

The stock market meanwhile has been supported by healthy profits at major corporations.

"At one point, the bond market was pricing in the first rate cut in March," said Bret Kenwell, an analyst at eToro. "Currently, that consensus has shifted to June and this report likely doesn't do much to change that outlook."

In Europe, data showed inflation eased further in Germany, France and Spain. Eurozone inflation figures are due Friday.

Stocks ended higher in Frankfurt and little changed in London, while the Paris CAC 40 index reached a fresh intra-day high before falling.

- Key figures around 2140 GMT -

New York - Dow: UP 0.1 percent at 38,996.39 (close)

New York - S&P 500: UP 0.5 percent at 5,096.27 (close)

New York - Nasdaq Composite: UP 0.9 percent at 16,091.92 (close)

London - FTSE 100: UP 0.1 percent at 7,630.02 (close)

Paris - CAC 40: DOWN 0.3 percent at 7,927.43 (close)

Frankfurt - DAX: UP 0.4 percent at 17,678.19 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,877.77 (Close)

Tokyo - Nikkei 225: DOWN 0.1 percent at 39,166.19 (close)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 16,511.44 (close)

Shanghai - Composite: UP 1.9 percent at 3,015.17 (close)

Euro/dollar: DOWN at $1.0808 from $1.0840 on Wednesday

Dollar/yen: DOWN at 149.93 yen from 150.70 yen

Pound/dollar: DOWN at $1.2624 from $1.2661

Euro/pound: DOWN at 85.59 pence from 85.60 pence

Brent North Sea Crude: DOWN 0.1 percent at $83.62 per barrel

West Texas Intermediate: DOWN 0.4 percent at $78.26 per barrel

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L.Wyss--VB