US stocks jumped on Friday, with major indexes ending a weekly series of losses after a series of more optimistic corporate results at least temporarily offset fears of a sharp economic downturn.
The S&P 500 index closed at close, rising 2.5% to 4158.24. The blue-chip index ended a seven-week series of losses and marked its best week of November 2020, rising more than 6.5 percent last Friday. The S&P 500 has also erased its losses for May so far.
The Dow Jones Industrial Average rose 576 points, or 1.8 percent, to close at 33,212.96 on Friday, and the Nasdaq Composite added more than 3 percent to close at 12,131.13.
Investors adopted a new set of economic data earlier Friday, including the latest footprint on basic personal consumption expenditure (PCE), the Federal Reserve’s preferred core inflation indicator. They show that inflationary pressures eased only modestly in April compared to March, reflecting the results of still rising consumer price indices and the producer price index published earlier this month. The core PCE increased by 6.3% in April compared to last year compared to the 6.6% increase in March, and the core PCE increased by 4.9% compared to 5.2% in the previous month. But some data also show that inflation-adjusted personal spending accelerated in April compared to March.
Over the past few sessions, investors have positively weighed 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 have largely exceeded Wall Street estimates, helping to allay fears that recent profit pressures from Walmart (WMT), Target (TGT) and Kohl’s (KSS) are equally reflected in all companies targeting consumers. And outside of retail, airlines including JetBlue (JBLU) and Southwest (LUV) have raised their sales guidelines for the current quarter, suggesting demand remains strong for discretionary travel.
“Overall, the American consumer is still in great shape. They entered these price increases, this inflation, with a pillow in their balance sheet. Employment is certainly high, so the general consumer in the United States remains very strong, “Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, told Yahoo Finance Live.
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“The big fear was that inflation would continue to run and would cause the Fed to pull the US economy into recession,” he added. “I think we’re all gradually starting to wake up to the reality that the cost of goods … has been pushed forward. Stocks have been restored and commodity spending has caused the inflation you see. This will come back as people move to costs in the services sector. “
“So it may feel like a recession in some parts of the economy, but other parts of the economy will do well,” Schute said. “Inflation will fall and the Fed will go a little easier.
However, other strategists question the resilience of the gains seen in the market so far this week, especially after inflation showed little significant signs of a significant decline to date.
“In our opinion, this is nothing more than a bear’s bounce. “When you look at those rebounds we’ve had, they’ve been very weak, there’s not a lot of conviction,” Eddie Gabur, co-founder and managing partner of Key Advisors Group, told Yahoo Finance Live. “The data we are receiving now that is causing this sell-off, remember, is data from the first quarter. The data coming in the second quarter will be worse than the first quarter. And we will not receive this news until July … So I think we will have a very insidious market in the next few months. “
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16:03 ET: Shares release best week of November 2020 as S&P 500 erases May losses
Here is where the markets closed on Friday:
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S&P 500 (^ GSPC): +100.43 (+ 2.47%) to 4,158.27
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Dow (^ DJI): +576.36 (+ 1.77%) to 33,213.55
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Nasdaq (^ IXIC): +390.48 (+ 3.33%) to 12,131.13
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Crude oil (CL = F): +1.01 $ (+ 0.89%) to $ 115.10 per barrel
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Gold (GC = F): + $ 3.40 (+ 0.18%) to $ 1857.30 per ounce
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10-year treasury (^ TNX): -1.3 bps to 2.7430% yield
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11:54 ET: Shares expand gains to trade near session highs, Dow heading for sixth straight profit day
Here are the main market movements at 11:54 ET:
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S&P 500 (^ GSPC): +72.05 (+ 1.78%) to 4129.89
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Dow (^ DJI): +344.28 (+ 1.05%) to 32,981.47
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Nasdaq (^ IXIC): +299.88 (+ 2.55%) to 12,040.53
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Crude oil (CL = F): + $ 0.12 (+ 0.11%) to $ 114.21 per barrel
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Gold (GC = F): + $ 4.50 (+ 0.24%) to $ 1,858.40 per ounce
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10-year treasury (^ TNX): -2.7 bps for 2.7290% yield
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10:06 AM ET: Consumer sentiment weakened at the end of May to its lowest level since 2011.
Consumer sentiment fell further in late May, largely due to concerns about inflation and business conditions in the short term.
The University of Michigan’s final monthly sentiment index fell to 58.4, which was revised down from 59.1 earlier in the month. Sub-indices tracking consumers’ views on current conditions and future expectations were also slightly revised downwards, with one-year inflation expectations slightly changing at 5.3%.
The recent drop in sentiment is largely due to “continuing negative views on current conditions for buying housing and durable goods, as well as future prospects for consumers in the economy, mainly due to fears of inflation,” wrote Joan Hsu, director of Surveys of Consumers . declaration. “At the same time, consumers have expressed less pessimism about the future prospects for their personal finances than about future business conditions.
“In the long run, the majority of consumers expect their financial situation to improve over the next five years; this share remains essentially unchanged in 2022, “Hsu added. “A stable outlook for personal finances can now support consumer spending. However, persistently negative views of the economy may dominate personal factors in influencing consumer behavior in the future. “
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9:32 a.m. ET: Shares open higher
Here are the main market movements at 9:32 AM ET:
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S&P 500 (^ GSPC): +32.86 (+ 0.81%) to 4090.70
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Dow (^ DJI): +56.27 (+ 0.17%) to 32,693.46
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Nasdaq (^ IXIC): +165.04 (+ 1.41%) to 11,905.69
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Crude oil (CL = F): -0.12 $ (-0.11%) to $ 113.97 per barrel
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Gold (GC = F): + $ 10.30 (+ 0.56%) to $ 1864.20 per ounce
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10-year treasury (^ TNX): -3.1 bps for 2.7250% yield
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8:58 a.m. ET: Trade deficit in goods falls more than expected in April after record highs in March
The gap in US trade in goods narrowed more than expected in April, after reaching a record high of nearly $ 126 billion in March.
The trade balance of advance goods showed a deficit of 105.9 dollars for the United States in April, the Ministry of Commerce announced on Friday. This followed a $ 125.9 billion difference in March, which was revised upwards of $ 125.3 billion last month.
The footprint suggests that trade caused slightly less resistance to the US economy at the beginning of the second quarter than the first. In the first quarter, net exports fell 3.23 percentage points of US gross domestic product (GDP). GDP fell by 1.5% on an annual basis in the first three months of the year.
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8:42 a.m. ET: Real personal spending accelerates in April as the savings rate drops to its lowest level since 2008.
US consumers continued to spend last month, although inflation remained high as one of the key contributors to US economic activity persisted in the spring. However, the percentage of personal savings has fallen to its lowest level in more than a decade, raising some concerns about how long spending can sustain the economy.
Real personal spending rose 0.7% a month in April, the Economic Bureau said on Friday, accelerating from 0.2% growth in March. Unadjusted for inflation, personal spending rose 0.9 percent, beating economists’ consensus expectations of a 0.8 percent increase, according to Bloomberg. This figure rose by 1.1% in March.
However, personal income slowed slightly last month, rising by 0.4% after rising 0.5% in March. And the percentage of personal savings, or the share of disposable personal income set aside for savings, fell to 4.4% from the March 5.0%, reaching its lowest level since 2008. After rising during the pandemic, the percentage of savings are already well below the 2019 average before the outbreak, when the savings rate averaged over 7%.
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8:38 a.m. ET: Inflation drops slightly in April as PCE rises 6.3% year-on-year
Inflation, measured by the Bureau of Economic Consumption’s Personal Consumption Index (PCE), fell only modestly in April compared to March, with rising prices showing little sign of a slowdown in the US economy.
The broadest indicator for PCE rose 0.2% in April, meeting economists’ expectations by consensus, according to Bloomberg. This is compared to a 0.9% monthly increase in March. However, on an annual basis, PCE is still rising by 6.3%, which is slightly hotter than expected and slowed only slightly from the annual increase of 6.6% in March.
The core PCE, which excludes volatile food and energy prices, also remained hot, up 4.9% in April from last year. This coincides with estimates and followed a 5.2% increase in March. The February figure of 5.3% is the highest since 1983.
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7:23 a.m. ET: Stock futures rise as indices seek to record weekly gains
Here is where the markets traded on Friday morning:
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S&P 500 futures (ES = F): +11 points (+ 0.27%) to 4066.75
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Dow futures (YM = F): +26 points (+ 0.08%) to 32,626.00
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Nasdaq futures (NQ = F): +54.25 points (+ 0.44%) to 12,333.50
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Crude (CL = F): -0.46 $ (-0.40%) to $ 113.63
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Gold (GC = F): + $ 8.80 (+ 0.47%) to $ 1862.70 per ounce
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10-year treasury (^ TNX): -3.3 bps to 2.725% yield
NEW YORK, NEW YORK CITY – MAY 23: Traders work on the floor of the New York Stock Exchange (NYSE) on May 23, 2022 in New York. After a week of sharp losses, markets rose in trading on Monday morning. (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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