Wall Street closed Friday on a positive note buoyed by economic data confirming strong U.S. economic recovery from the pandemic despite growing inflationary threat. For the week as a whole, all the three major stock indexes ended in the green. However, for May, both the Dow and the S&P 500 managed to gain while Nasdaq Composite suffered losses due to inflation concern. U.S. stock markets were closed on Monday to observe Memorial Day.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.2% to close at 34,529.45, maintaining three-day winning streak. Notably, 14 components of the 30-stock index ended in the green while 16 in red. Major gainer of the blue-chip index was salesforce.com, inc. CRM that surged 5.4%. The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 13,748.74, gaining 0.1% due to strong performance by large-cap stocks. The tech-laden index has reversed its previous day’s losses despite concerns of higher inflation and earlier-than-expected rise in the benchmark interest rate.
Meanwhile, the S&P 500 rose 0.1% to end at 4,204.11, continuing three-day winning run. The Real Estate Select Sector SPDR (XLRE) and the Utilities Select Sector SPDR (XLU) advanced 0.7% and 0.5%, respectively. Notably, eight out of eleven sectors of the benchmark index closed in the green while three in red.
The fear-gauge CBOE Volatility Index (VIX) was up 0.1% to 16.76. A total of 10.32 billion shares were traded on Friday, lower than the last 20-session average of 10.52 billion. Advancers outnumbered decliners on the NYSE by a 1.33-to-1 ratio. On Nasdaq, a 1.12-to-1 ratio favored advancing issues.
The Department of Commerce reported that the PCE (personal consumption expenditure) inflation rose 0.6% in April from March and 3.6% year over year, reflecting its highest monthly gain in 13 years. The core PCE inflation (excluding volatile food and energy prices) gained 0.7% in April. The consensus estimate was 0.6%. Year over year, the core PCE inflation – Fed’s favorite gauge of inflation – climbed 3.1% in April after rising 1.9% in March, marking the highest monthly gain in 29 years. The figure was well above the Fed’s target rate of 2%.
Personal income declined 13.1% n April after gaining a downwardly revised 20.9% gain in March. However, the data was better than the consensus estimate of a decline of 14.4%. Termination of a onetime $1,400 stimulus check was the main reason behind the decline of personal income.
Despite elimination of government stimulus, consumer spending rose 0.5% in April, in line with the consensus estimate, after jumping upwardly revise 4.7% in March. Personal savings rate dropped to 14.9% in April from a upwardly revised 27.7% in March.
The University of Michigan’s final consumer sentiment index for May inched up to 82.9 from the preliminary estimate of 82.8. However, the data fell below the consensus estimate of 83.3 and April’s reading of 88.3, which was the 13-month highest. The sub-index of current conditions dropped to 89.4 in May from 97.2 in April. The sub-index of expectations for next six month reduced to 78.8 In May from 82.7 in April.
Last week was a good one for Wall Street. The Dow and the S&P 500 gained 0.9% and 1.2%, respectively. Both indexes ended their back-to-back weekly losses. The Nasdaq Composite rallied 2.1%, registering its best weekly performance since the week ended Apr 9. Robust economic recovery was the reason for stock market’s solid performance.
Last month was a mixed one for U.S. stock markets. Volatility spiked in May due to market participants’ concern about an impending inflation. Despite this, the Dow and the S&P 500 gained 1.9% and 0.6%, respectively while the Nasdaq Composite declined 1.5%. The small-cap specific Russell 2000 Index was up 0.1%.
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