U.S. stocks rose on Friday as the latest data on a closely watched inflation gauge confirmed signs of slowing inflation and investors absorbed the fallout from the Biden-Trump dispute.
The S&P 500 (^GSPC) was up about 0.1% after closing just shy of its all-time high. The tech-heavy Nasdaq Composite Index (^IXIC) rose 0.3%, while the Dow Jones Industrial Average (^DJI) was down about 0.1%.
The index signals a bright end to a volatile week in which the S&P 500 and Nasdaq recovered from three straight days of losses. As the final trading day of June ends, stocks are on track to post a strong first half of the year, but the volatility is fueling concerns that stocks may fall for the rest of the year.
The final big data point for the first half of the year came in the form of the Fed’s preferred inflation gauge, with Yahoo Finance’s Josh Schafer reporting that inflation eased in May as price growth continued at its slowest pace since March 2021.
The core personal consumption expenditures (PCE) index, which excludes food and energy costs and is closely watched by the Fed, rose 0.1% in May from the previous month, in line with Wall Street expectations.
Meanwhile, with the US presidential election in November high on the risk list, investors focused on President Joe Biden’s weak showing in the first debate with Republican front-runner Donald Trump. Tax cuts and trade restrictions promised by former president Biden are seen as likely to boost stocks. Trump Media and Technology Group (DJT) shares surged in morning trading.
Markets are also on alert for further signs that consumer resilience is weakening as major companies signal worsening sales outlooks. Nike (NKE) shares fell more than 15% at the open, while Walgreens (WBA) shares remain under pressure in the aftermath of Thursday’s 22% plunge.
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Stocks rise as Federal Reserve’s favorite inflation gauge shows further cooling
U.S. stocks rose on Friday after the latest data from the Federal Reserve’s preferred inflation gauge showed inflation continuing to slow, raising the likelihood of an interest rate cut in the coming months.
The S&P 500 (^GSPC) was up about 0.1% after closing just shy of its all-time high. The tech-heavy Nasdaq Composite Index (^IXIC) rose 0.3% and the Dow Jones Industrial Average (^DJI) added about 0.1%.
The Fed’s preferred inflation gauge showed prices rising at their slowest pace since March 2021.
Inflation eased in May, with prices rising at the slowest pace since March 2021, according to the latest data from the Federal Reserve’s preferred inflation gauge.
The core personal consumption expenditures (PCE) index, which excludes food and energy costs and is closely watched by the Federal Reserve, rose 0.1% from the previous month in May, in line with Wall Street expectations but slower than April’s 0.3% increase.
Core PCE rose 2.6% year-on-year in May, in line with expectations and unchanged from the annual rate of increase over the past two months. The May figure marked the slowest annual rate of increase in more than three years.
Trump media movement
Shares of Trump Media & Technology (DJT) are rising after President Joe Biden’s shaky debate performance.
At the time of writing, shares were up 7.5% in pre-market trading.
Be careful what you’re trading here, guys.
This is the company’s latest 10-Q report, and it shows a “company” doing something and losing a lot of money in the process.
Nike shares are being trampled
As painful to watch as last night’s debate (in a way…) is the fact that Nike (NKE) shares are down 14% pre-market as of this writing.
The company’s guidance was deeply disappointing and I have concerns about management’s ability to execute on product innovation. Not seeing better guidance from Nike in an Olympic year is a red flag.
I liked Stifel analyst Jim Duffy’s take on the quarter.
“FY25 guidance (fifth downward revision in six quarters) pushes out the growth inflection point outlook until 2025 (likely Q4 FY25 or spring at the earliest), asking investors to look ahead to an uncertain consumer discretionary backdrop through the second half of FY24 before reassuring an as yet unproven style success and momentum picks up again in the second half of FY25. Management credibility is in serious question, with a possible C-level regime change adding further uncertainty. November investor meeting likely outlined a multi-year economic model with lower than precedent returns, adding risk to the premium enjoyed at the historical multiple. We continue to evaluate N-Scale’s advantage in a category with potential secular growth tailwinds and structural margins, but the current valuation does not support a compelling upside case until the growth inflection point becomes more tangible.”
Duffy downgraded Nike to a “hold” rating this morning.
