Analyst: Higher-than-expected core PCE index may spell trouble for Fed

While stronger-than-expected US GDP figures for the second quarter may ease some concerns about the economy, analysts say a higher-than-expected 2.9 per cent core personal consumption expenditures price index (PCE) could spell trouble for the Federal Reserve.

Emma Wall of Hargreaves Lansdown said in a report that while the core PCE index is above target, it is falling, which, combined with strong economic growth data, eases pressure on the Fed to cut rates next week.

Emma Wall expects a wave of rate cuts from the Fed, the ECB and the Bank of England in September. She also believes there are better value opportunities in small-cap stocks for investors who follow the U.S. stock market, despite the recent pullback in the "Magnificent Seven".