US stocks indexes were higher in afternoon trading on Friday, on track to snap a three-day losing streak, as tepid inflation data brought back investors to riskier assets, despite heightened tensions between the United States and North Korea. The weaker-than-expected consumer price data in July, which pointed to benign inflation, could cause the Federal Reserve to hold off from raising rates again this year.
The S&P was, however, on track to post its biggest weekly loss in about five months and the Dow on course to record its biggest weekly fall in nearly four months. "The market is trying to interpret the CPI data as somewhat positive because it is anticipating that the Fed will be on hold not only in September but also possibly in December," said Robert Pavlik, chief market strategist at Boston Private Wealth.
"It clears the field of another possible issue and with that you start to see a little bit of short covering going on." Traders saw the chance of a rate hike in December fall to 40 percent from 42 percent shortly before the release of the data, according to Federal funds futures.
Nearly $1 trillion has been wiped out from global equity markets since tensions were sparked off by Trump's "fire and fury" comments on Tuesday. In his latest warning to North Korea, US President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".
At 12:43 pm ET (1643 GMT), the Dow Jones Industrial Average was up 49.69 points, or 0.23 percent, at 21,893.7 and the S&P 500 was up 6.84 points, or 0.28 percent, at 2,445.05. The Nasdaq Composite was up 38.25 points, or 0.62 percent, at 6,255.12.