Investing.com — The Dow Jones Industrial Average notched a big gain on Friday as data showing inflation last month was in line with expectations kept hopes of an interest rate cut later this year alive and offset weakness in technology stocks.
As of 16:00 ET (20:00 GMT), it was up 574 points (1.5%), up 0.9% and down 0.01%.
Treasury yields fall as stable PCE supports rate cut expectations
Treasury yields fell on Friday after the Federal Reserve’s preferred gauge of inflation, the core personal consumption expenditures (PCE) price index, rose 2.8% from the previous month in April, flat from the previous month, in line with investor expectations.
The expected data restored some confidence that disinflationary trends are on track following a recent series of hawkish comments from Fed members.
With inflation remaining stubbornly elevated, “Fed officials are increasingly questioning whether the Committee has not tightened enough to address upward price pressures or whether the current pace of policy is as tight as previously thought,” Stifel said in the note.
Dallas Fed President Rory Logan said Thursday he remains concerned about the risk of rising inflation and warned that the U.S. central bank needs to remain “flexible” and “consider all options” as it monitors the data and decides how to respond.
Technology companies narrow losses Dell Plummets on Revenue Decline, Zscaler Rise
Technology stocks continued to weigh on the broader market as they fell from all-time highs, with semiconductor and Dell shares leading the decline.
Dell Technologies (NYSE:) shares fell more than 17% after the company issued a weaker-than-expected current-quarter profit outlook and suggested that increased spending on building servers to run artificial intelligence workloads would weigh on its full-year profit margins.
But despite the near-term challenges, UBS said it will continue to back Dell because it believes the company will continue to benefit from growing demand for AI servers. UBS raised its target price on Dell to $164 from $141, saying “AI adoption will continue, despite a slowdown.”
Enterprise software stocks continue to struggle, following a drop in Salesforce the previous day, and developer data platform MongoDB (NASDAQ:) plunged more than 24% after the company lowered its earnings outlook due to a weak macroeconomic environment and slowing deal winnings.
Nordstrom, Gap report strong earnings results
Apparel retailer Nordstrom (NYSE:) rose 5% after it maintained its full-year outlook but reported a wider-than-expected first-quarter loss.
Clothing retailer Gap Inc. (NYSE:) saw its shares rise about 29% after the company raised its full-year sales forecast and reported first-quarter results that beat market expectations.
Cloud security company Zscaler (NASDAQ:) rose 8% after reporting strong quarterly earnings and raising its earnings outlook.
Energy stocks ignore falling oil prices
Energy stocks rose despite oil prices turning negative as demand concerns outweighed ongoing expectations that OPEC+ will maintain its oil production cuts after announcing its June 2 meeting will be held in-person rather than remotely.
Data released on Thursday showed a larger-than-expected 2 million barrel increase, raising concerns that demand in the world’s biggest fuel consumer is weakening ahead of the busy summer travel season.
(Peter Nurse and Amber Warrick contributed to this article.)
