(Updates with latest market prices and developments.)
US benchmark equity indexes were advancing intraday as markets assessed fresh inflation data, while oil prices fell.
The Nasdaq Composite and the Dow Jones Industrial Average were up 1.2% each at 26,406.1 and 52,675.2, respectively, after midday Friday. The S&P 500 advanced 1.1% to 7,675.1. Except healthcare, all sectors were in the green, led by communication services.
In economic news, US consumer inflation hit a three-month high in August as energy prices rose, while the core measure unexpectedly accelerated, official data showed, likely adding pressure on the Federal Reserve to raise interest rates.
"With oil prices up significantly in recent weeks, again hovering around $100 per barrel and underlying price pressures in services remaining sticky, a (Fed) rate hike at next week's meeting now appears all but certain," TD Economics said in a note.
The probability of the US central bank increasing its benchmark lending rate by 25 basis points next week jumped to 87% Friday from 72% Thursday, according to the CME FedWatch tool. The odds pointing to another Fed pause fell to 13% from 28%.
West Texas Intermediate crude oil was down 2.7% at $99.72 a barrel intraday, while Brent dropped 3% to $104.42. However, both benchmarks were on track for their second consecutive weekly advances as tensions in the Middle East intensified earlier in the week.
Diesel prices in the US surged past $6 per gallon for the first time ever Friday amid concerns over energy supply disruptions that in turn could fuel inflation.
A six-member bloc of Gulf states is considering talks with Iran next week over the future of the Strait of Hormuz, the world's most important chokepoint for crude flows, news outlets reported Friday.
US consumer sentiment weakened in September, while inflation expectations rose, with the year-ahead price growth outlook reaching the highest reading since June, preliminary results of a University of Michigan survey showed.
Treasury yields were mostly higher intraday, with the two-year rate up eight basis points at 4.63% and the 10-year rate rising 1.1 basis points to 4.96%.
In company news, Dell Technologies (DELL) shares jumped 10% intraday, the top gainer on the S&P 500, as RBC Capital Markets initiated its coverage of the computer maker's stock with an outperform rating and a $640 price target.
Dell is well positioned to benefit from the multiyear artificial intelligence infrastructure spending cycle, RBC said in a note.
ACV Auctions (ACVA) shares surged 44%, while Copart (CPRT) fell 3.4%, making it the worst performer on the S&P 500. Late Thursday, the companies said Copart will acquire ACV Auctions for $10.50 per share in cash, representing an implied equity value of roughly $1.9 billion.
Spot gold advanced 1.2% to $4,367.78 per troy ounce, while silver edged higher by 0.1% to $65.02 per ounce.
