Wall Street stocks rose on Friday as government data showed a measure of underlying inflation cooling, bringing some relief to markets.

Around 10 minutes into trading, the Dow Jones bounced by 0.5 percent to 33,829.

The S&P 500 rallied 0.7 percent to 4,328, while the Nasdaq surged 1.1 percent to 13,340.

"There's a little bit of a sigh of relief that's happening on Wall Street," said Edward Moya of the OANDA trading platform.

This comes as a measure of underlying inflation favoured by the US central bank came in lower than expected, suggesting a "disinflation process is clearly in place."

While the annual personal consumption expenditures (PCE) price index rose 3.5 percent in August – up from the prior month – the "core" measure stripping out volatile food and energy costs was down from recent months on an annual basis.

With the core reading cooling, "that's allowing the market to become a little bit less worried that the (Federal Reserve) might have to deliver another rate hike," Moya said.

But a note by Briefing.com cautioned that the overall PCE price index report was not "weak enough to cause a sudden shift" in market expectations. (AFP)