US stocks jumped on Friday, with major indexes ending weeks of losses after a series of more upbeat corporate results at least temporarily offset fears of a sharp economic downturn.
[Click here to read what’s moving markets on Tuesday, May 31]
The S&P 500 rallied at the close, gaining 2.5% to end at 4,158.24. The blue-chip index ended a seven-week losing streak and posted its best week since November 2020, rising more than 6.5% since last Friday. The S&P 500 also erased its May-to-date losses.
The Dow Jones Industrial Average rose 576 points, or 1.8%, to close at 33,212.96 on Friday, and the Nasdaq Composite rose more than 3% to close at 12,131.13.
Investors digested a new set of economic data on Friday, including the latest print basic personal consumption expenses (PCE): The Federal Reserve’s preferred gauge of core inflation. These showed that inflationary pressures eased only modestly in April compared with March, echoing the still-elevated consumer price index and producer price index results released earlier in this month. Core PCE rose 6.3% in April from a year ago compared to March’s 6.6% increase, and core PCE rose 4.9% from 5 .2% of the previous month. But separate data also showed that personal spending, adjusted for inflation, accelerated in April compared with March.
In recent sessions, investors have looked favorably on the latest batch of quarterly results and guidance from retailers such as Macy’s ( M ), Nordstrom ( JWN ), Dollar General ( DG ), and Dollar Tree ( DLTR ). These companies largely beat Wall Street estimates, helping to calm concerns that profit pressures recently reported by Walmart ( WMT ), Target ( TGT ) and Kohl’s ( KSS ) were affecting all of the equity-oriented companies equally. consumer And outside of retail, airlines such as JetBlue ( JBLU ) and Southwest ( LUV ) raised their sales guidance for the current quarter, suggesting demand remained strong for discretionary travel.
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“In general, the American consumer is still in great shape. They went into these price hikes, this inflation, with a cushion on their balance sheet. Employment is certainly high, so the American consumer American generally remains in a very strong place,” Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, told Yahoo Finance Live.
“The big fear was that inflation would continue to run away and cause the Fed to have to squeeze the US economy into a recession,” he added. “I think we’re all starting to gradually wake up to the reality that spending on goods … was pushed forward. Inventories have been rebuilt, and spending on goods has driven the inflation that you’re seeing. That’s going to play out as people move to service sector spending.”
“And so it may look like a recession in some parts of the economy, but other parts of the economy will be fine,” Schutte said. “Inflation will fall and the Fed will go a little easier.”
However, other strategists question the durability of the gains seen in the market so far this week, especially as inflation has shown few significant signs of falling substantially so far.
“This is nothing more than a bearish bounce in our view. When you look at these bounces that we’ve had, they’ve been on very light volume, there’s not a lot of conviction,” Eddie Ghabour, co-founder and managing partner. of Key Advisors Group, told Yahoo Finance Live. “The data that we’re getting now that’s been causing this selloff, remember, is Q1 data. Q2 data is going to be worse than Q1. And we’re not going to get that news until July… So I think that we will have a very treacherous market in the coming months”.
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4:03 PM ET: Stocks post best week since November 2020 as S&P 500 erases May losses
Here’s where the markets closed Friday’s session:
S&P 500 (^GSPC): +100.43 (+2.47%) to 4,158.27
Dow (^DJI): +576.36 (+1.77%) up to 33,213.55
Nasdaq (^IXIC): +390.48 (+3.33%) to 12,131.13
Crude (CL=F): +$1.01 (+0.89%) to $115.10 a barrel
Gold (GC=F): +$3.40 (+0.18%) to $1,857.30 per ounce
10-year treasury (^TNX): -1.3 bp to get 2.7430%
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11:54 am ET: Stocks extend gains to near session highs, Dow heads for sixth straight day of gains
Here were the top moves in markets as of 11:54 a.m. ET:
S&P 500 (^GSPC): +72.05 (+1.78%) to 4,129.89
Dow (^DJI): +344.28 (+1.05%) up to 32,981.47
Nasdaq (^IXIC): +299.88 (+2.55%) up to 12,040.53
Crude (CL=F): +$0.12 (+0.11%) to $114.21 a barrel
Gold (GC=F): +$4.50 (+0.24%) to $1,858.40 per ounce
10-year treasury (^TNX): -2.7 bp to yield 2.7290%
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10:06 am ET: Consumer sentiment weakened in late May to lowest level since 2011
Consumer sentiment fell further in late May, largely due to concerns about inflation and near-term trading conditions.
The University of Michigan’s latest monthly sentiment index declined to 58.4, which was revised down from the previously reported 59.1 for the month. Sub-indexes tracking consumers’ views on current conditions and future expectations were also revised down slightly, with one-year inflation expectations little changed at 5.3%.
The latest drop in sentiment “was largely driven by continued negative views of current home buying and durable goods conditions, as well as consumers’ future outlook for the economy, primarily due to concerns about inflation,” Joanne Hsu, Director of Consumer Surveys. he wrote in a statement. “At the same time, consumers expressed less pessimism about the future outlook for their personal finances than about future business conditions.”
“In the long term, most consumers expected their financial situation to improve over the next five years; this share remains largely unchanged through 2022,” Hsu added. “A stable outlook for personal finances may support consumer spending. Still, persistent negative views of the economy may come to dominate personal factors in influencing consumer behavior going forward.”
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9:32 am ET: Stocks open higher
Here were the top market moves as of 9:32 a.m. ET:
S&P 500 (^GSPC): +32.86 (+0.81%) to 4,090.70
Dow (^DJI): +56.27 (+0.17%) up to 32,693.46
Nasdaq (^IXIC): +165.04 (+1.41%) to 11,905.69
Crude (CL=F): -$0.12 (-0.11%) to $113.97 a barrel
Gold (GC=F): +$10.30 (+0.56%) to $1,864.20 per ounce
10-year treasury (^TNX): -3.1bp for a return of 2.7250%
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8:58 am ET: Goods trade deficit narrows more than expected in April after record reading in March
The US goods trade gap decreased more than expected in April after hitting an all-time high of nearly $126 billion in March.
The advanced merchandise trade balance showed a US$105.9 deficit in April, the Commerce Department said on Friday. That followed a gap of $125.9 billion in March, which was revised up from $125.3 billion last month.
The print suggests that trade produced slightly less of a drag on the US economy at the start of the second quarter compared to the first. In the first quarter, net exports reduced US gross domestic product by 3.23 percentage points (GDP). GDP fell at an annualized rate of 1.5% in the first three months of the year.
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8:42 am ET: Real personal spending accelerates in April, while savings rate falls to lowest level since 2008
US consumers kept up spending last month even as inflation remained elevated as one of the main contributors to US economic activity held off until the spring. However, the personal savings rate fell to the lowest level in more than a decade, raising some concerns about how much longer spending could sustain the economy.
Real personal spending rose 0.7% month-on-month in April, the Economist’s Office said on Friday, accelerating from a 0.2% rise in March. Unadjusted for inflation, personal spending rose 0.9 percent, beating consensus economists’ expectations for a 0.8 percent increase, according to Bloomberg data. This metric had increased by 1.1% in March.
Personal income, however, slowed slightly last month, rising 0.4% after a 0.5% rise in March. And the personal savings rate, or share of disposable personal income devoted to savings, fell to 4.4% from 5.0% in March, hitting its lowest level since 2008. After from soaring during the pandemic, the savings rate is now well below average. of 2019 before the outbreak, when the savings rate had averaged above 7%.
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8:38 am ET: Inflation eases slightly in April as PCE rises 6.3% year-over-year
Inflation, as measured by the Bureau of Economic Analysis’s personal consumption expenditures (PCE) index, eased only modestly in April compared with March, and fast-rising prices showed little sign of slowdown in the US economy.
The broader measure of PCE rose 0.2% in April month-on-month, matching consensus economists’ expectations, according to Bloomberg data. This compared with a monthly increase of 0.9% in March. However, year-over-year, PCE still soared 6.3%, coming in a bit hotter than expected and moderating only slightly from March’s 6.6% annual increase.
Core PCE, which excludes volatile food and energy prices, also stayed warm, rising 4.9% in April from a year ago. That matched estimates and followed a 5.2% increase in March. February’s reading of 5.3% had been the highest since 1983.
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7:23 am ET: Stock futures rise as indexes look to post weekly gains
Here’s where the markets traded on Friday morning:
S&P 500 futures (IS=F): +11 points (+0.27%) up to 4,066.75
Dow futures (YM=F): +26 points (+0.08%) up to 32,626.00
Nasdaq futures (NQ=F): +54.25 points (+0.44%) up to 12,333.50
Crude (CL=F): -$0.46 (-0.40%) to $113.63
Gold (GC=F): +$8.80 (+0.47%) to $1,862.70 per ounce
10-year treasury (^TNX): -3.3 bp to get 2.725%
NEW YORK, NEW YORK – MAY 23: Traders work on the floor of the New York Stock Exchange (NYSE) on May 23, 2022 in New York City. After a week of heavy losses, markets rose in Monday morning trading. (Photo by Spencer Platt/Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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