NEW YORK (AP) — U.S. stocks rose Friday after some mixed signals. To the benefit of big banks and inflation That had little impact on Wall Street’s view that interest rate cuts are on the way.
The S&P 500 rose 0.6%, finishing with a gain for the fifth straight week in the past six. The Dow Jones Industrial Average rose 247 points, or 0.6%, and the Nasdaq Composite Index rose 0.6%. All three indexes were on track to hit new all-time highs in afternoon trading but finished below those levels.
Bank of New York Mellon Co. rose 5.2%, one of the market’s biggest gainers, after it reported spring profits that beat analysts’ expectations. Highly influential Big Tech stocks It also helped halt a sell-off in stock prices the previous day, which had risen sharply amid enthusiasm over artificial intelligence technology, helping to push up the stock price.
Those investments helped offset losses at Wells Fargo, whose shares fell 6% even as the bank reported profits that beat analysts’ expectations. The company said a key underlying measure of profits was down year over year and that net interest income could be at the lower half of its expected range for the full year.
The bond market was Wall Street’s most active this week, with Treasury yields fluctuating sharply following the latest inflation report, which showed wholesale prices rose more than economists expected last month but disappointing data showing the consumer price index rose on Thursday. It was better than I expected.
But after a few initial fluctuations, Treasury yields settled down and remained below Thursday’s closing levels.
“It’s going to take some time to know if yesterday’s numbers were an anomaly or if today’s numbers are an anomaly,” said Chris Larkin, managing director of trading and investing at Morgan Stanley E-Trade.
Part of the acceleration in Friday’s data could be the result of rising corporate profit margins, though profit margins can fluctuate sharply and some analysts noted they were unrelated to the Federal Reserve’s inflation measures.
Also helping to stabilize yields were reports that U.S. households are less fearful about inflation staying high: Preliminary data from the University of Michigan show that U.S. consumers expect inflation to be 2.9% over the next 12 months.
This marks the second straight month that those expectations have eased, helping to ease concerns about a potential vicious cycle in which expectations of higher inflation spur U.S. consumers to take actions that push up inflation even higher. That could give the Fed more evidence of slowing inflation that it needs. Start lowering key interest ratesThis is the highest level in more than 20 years.
Following the release of the wholesale price index report, the yield on the 10-year Treasury note rose to 4.23%, before settling at 4.18%, down from 4.21% late Thursday, down from 4.70% in April, as calming inflation momentum raised expectations that the Fed would cut short-term interest rates.
Traders are pricing in a 94% chance that the Federal Reserve will begin easing interest rates in September, according to data from CME Group. Lower rates would ease pressure that has built up in the economy due to high borrowing costs. Buy a housecar, or credit cardBut Fed officials He said They want to see “better data” on inflation before taking action.
Easing interest rates would benefit all kinds of businesses, but smaller companies could be especially big beneficiaries of increased borrowing. Small-cap stocks in the Russell 2000 outperformed the S&P 500 on Thursday, breaking a longstanding trend and continuing that trend on Friday.
The Russell 2000 rose 1.1%, nearly double the gain of the S&P 500, finishing with its strongest week in eight months.
Overall, the S&P 500 rose 30.81 points to 5,615.35, the Dow Jones Industrial Average rose 247.15 points to 40,000.90 and the Nasdaq Composite added 115.04 points to 18,398.45.
Of course, traders have a long history. Too early to predict cuts JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned on Friday that rising U.S. government debt and other factors could keep inflation and interest rates higher than markets expect.
Among overseas stock markets, Japan’s Nikkei stock average retreated slightly from its recent record gains, falling 2.4%, but is still up more than 23% so far this year.
Index figures were mixed in other Asian countries, but rose in much of Europe.
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AP writers Matt Ott and Jimmo Zhong contributed.
