Wall Street opens higher as data lowers rate hike view

NEW YORK (REUTERS) - Wall Street opened higher on Thursday after tepid inflation data raised expectations that Federal Reserve will hold off from increasing interest rates again this year.

The core personal consumption expenditures (PCE) price index - the Fed's preferred inflation measure - increased 1.4 per cent in the 12 months through July, its smallest year-on-year increase since December 2015.

Core PCE has undershot the US central bank's 2 per cent target for the past five years.

Consumer spending increased 0.3 per cent last month, below the 0.4 per cent rise expected by economists.

Chances of a rate hike in December have fallen to about 36 per cent, from 43 per cent a month ago, according to CME Group's FedWatch tool.

Labor Department data showed the number of Americans filing for unemployment benefits rose slightly last week.

The weekly data precedes the more comprehensive monthly jobs report on Friday, which will help investors gauge the strength of the labor market as they look for clues on the Fed's next move on rates.

"We do anticipate the overall market reaction to remain reticent ahead of the jobs data due tomorrow," said Naeem Aslam, chief market analyst at Think Markets UK.

At 9:33 a.m. ET (9:33 p.m. Singapore time), the Dow Jones Industrial Average was up 49.47 points, or 0.23 per cent, at 21,941.9, the S&P 500 was up 6.72 points, or 0.27 per cent, at 2,464.31. The Nasdaq Composite was up 21.32 points, or 0.33 per cent, at 6,389.63.

All 11 major S&P sectors were higher, with the health index's 0.55 per cent rise leading the advancers.

UnitedHealth's 0.7 per cent gain provided the biggest boost to the Dow, while Amazon helped boost the Nasdaq and the S&P.

US crude prices are on track to post the steepest monthly losses in more than a year as concerns spread over falling demand after Harvey knocked out almost a quarter of US refineries.

Investors are also worried about escalating tensions between the United States and North Korea after President Donald Trump dismissed any diplomatic negotiations in a tweet on Wednesday, a day after Pyongyang fired a ballistic missile.

Advancing issues outnumbered decliners on the NYSE by 1,950 to 543. On the Nasdaq, 1,555 issues rose and 628 fell.