Wall Street gains on Friday were as follows:
- Dow Jones Industrial closed up 1.64 percent and reached 40,589.34 points.
- At the end of the day, the S&P 500 gained 1.11 percent and amounted to 5,459.10 points.
- The Nasdaq Composite rose 1.03 percent and closed the session at 17,357.88 points.
- The Russell 2000 mid-cap index rose 1.67 percent to 2,260.07 points.
- The VIX volatility index falls by 11.21 percent to 16.39 points.
Is it premature to discuss further interest rate cuts in the future?
On Friday, investors awaited the publication of the U.S. Personal Consumption Expenditure (PCE) Index for June, the Federal Reserve’s preferred measure of inflation. The U.S. PCE deflator in June was 2.5 percent year-on-year, compared with 2.6 percent year-on-year a month earlier and consensus at 2.4 percent, the Commerce Department’s Bureau of Economic Analysis reported. The core indicator was 2.6 percent year-on-year, compared with 2.6 percent a month earlier and expectations at 2.5 percent year-on-year.
“I think this could serve as another reminder that inflation hasn’t completely gone away. I think markets have gotten a bit carried away in terms of how quickly interest rates are going to fall over the next six to 12 months,” said Hugh Gimber, global market strategist at JPMorgan Asset Management.
But Friday’s positive inflation data boosted investor hopes for more rate cuts this year. Sam Stovall of CFRA Research said Friday’s move was driven by sell-off sentiment, better-than-expected GDP data on Thursday and expectations that the Federal Reserve will begin cutting rates on economic resilience. “Today’s PCE data helped pull the market back from the brink,” he added.
Torsten Slok, an economist at Apollo, still thinks it’s premature to talk about further rate cuts in the future. He said that while the Fed could cut in September, more progress is still needed in the fight against inflation. He added that he doesn’t believe the weakness in some labor market indicators justifies pricing in three cuts this year.
Next week, Microsoft, Meta, Amazon, Apple, McDonald’s and Boeing will report their results.
American consumer spending rose 0.3% MoM in June, up from 0.4% MoM the previous month, revised up from +0.2%, the Commerce Department’s Bureau of Economic Analysis reported. Expectations were for a 0.3% MoM increase. American income rose 0.2%, up from +0.4% the previous month, revised up from +0.5%. The market expected a 0.4% MoM increase.
Tech stocks that had been losing ground this week have rebounded, with Nvidia gaining nearly 1 percent, Microsoft and Amazon each up more than 1 percent, and Meta up nearly 3 percent. FactSet data shows that more than 40 percent of S&P 500 companies have already released quarterly results. Of those, more than 78 percent exceeded analysts’ forecasts. Microsoft, Meta, Amazon, Apple, McDonald’s, and Boeing are all reporting next week.
Shares of Coursera rose about 45% on Friday after the course-based platform reported better-than-expected financial results for the second quarter of 2024. Dexcom fell more than 40% after the diabetes sensor maker updated its fiscal year guidance, lowering expected revenue. 3M rose 23% after better-than-expected quarterly results.
Shares of Newell Brands, owner of Yankee Candle and Rubbermaid, rose 40% after posting better-than-expected earnings per share. In the oil market, WTI contracts for August fell 1.93% to $76.77 a barrel, while August Brent futures fell 1.93% to $80.78/b.
