U.S. stocks rose Friday after a key U.S. government report on inflation bolstered expectations on Wall Street that the Federal Reserve is poised to cut interest rates next month for the first time in more than four years.

The S&P 500 rose 0.6% in morning trading, while the Dow Jones Industrial Average added 56 points, or 0.1%. The Nasdaq composite rose 1% as of 9:53 a.m. Eastern.

The Commerce Department said its personal consumption and expenditures report showed prices rose just 0.2% from June to July, up slightly from the previous month’s 0.1% increase. Compared with a year earlier, inflation was unchanged at 2.5%.

Economists had expected the PCE, which is the Federal Reserve’s preferred measure of inflation, would to show that inflation edged up to 2.6% in July. It was as high as 7.1% in the middle of 2022.

The report confirms price increases are cooling, keeping the central bank on track to cut rates at its upcoming meeting next month. The market is betting that the Fed will cut its benchmark rate by a full 1% by the end of the year.

Bond yields rose slightly in the Treasury market. The yield on the 10-year Treasury rose to 3.88% from 3.86% late Thursday.

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Chipmakers rose broadly, led by Marvell Technology, which was up 7.8% after its latest quarterly results hit Wall Street’s sales and profit targets. Broadcom rose 3.3% and Nvidia added 2.2%.

Dell also beat analysts’ second-quarter forecasts, boosted by record server and networking revenue as companies continue to beef up their artificial intelligence infrastructure. Its shares rose 2.9%.

Mall-based cosmetics retailer Ulta Beauty fell 3.4% after its sales and profit fell short of expectations. Ulta, which Warren Buffet’s Berkshire Hathaway revealed a stake in earlier this month, also trimmed its guidance below analysts’ forecasts.

Mostly solid U.S. earnings and economic growth updates are capping off a month of encouraging reports for the broader economy. Data from various reports in August have shown that retail sales, employment and consumer confidence remain strong.

The benchmark S&P 500 is on pace to close out the final trading day of August with a 1.7% gain for the month. The index is up nearly 18% this year.

In Europe, France’s CAC 40 advanced 0.2%, Germany’s DAX ticked up 0.2%, and Britain’s FTSE 100 gained 0.2%.

Japan’s benchmark Nikkei 225 added 0.7% to finish at 38,647.75 after data on the world’s fourth largest economy came in mostly positive.

Industrial production rose 2.8% in July from the previous month, a rebound from minus 4.2% in June, according to Ministry of Economy, Trade and Industry. That was weaker than what the market had expected, but a sign of growth. In other findings, the unemployment rate rose to 2.7% in July, up from 2.5% in June.

Tokyo consumer prices rose more than expected to 2.6% year on year in August, up from 2.2% in July, as prices of food and utilities surged. That’s almost certain to catch the attention of the Bank of Japan as it mulls when to raise interest rates, a move that’s expected later this year or early next year.

In energy trading, benchmark U.S. crude lost $1.88 to $74.03 a barrel. Brent crude, the international standard, gave back $1.54 to $77.30 a barrel.