Wall Street rebounded and Treasury yields took a breather after the release of positive economic data on Friday, as investors positioned themselves ahead of the long Memorial Day weekend in the United States and the unofficial start of summer. The rebound in the US stock market caps a week in which the minutes of the Federal Reserve’s latest policy meeting adopted a hawkish tone, economic data hinted at the possibility of higher inflation and the Chipmaker Nvidia’s earnings report, which beat and rose, has reignited investor fervor for AI. The tech-heavy Nasdaq pulled all three major U.S. stock indexes higher as part of a broad rally. “After yesterday’s very tough day, it was nice to see the bulls take a position ahead of the long holiday weekend,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “The economy continues to surprise on the upside. That’s why stocks are flirting with all-time highs.”
On a weekly basis, the S&P 500 was virtually unchanged, while the Dow was on track to end its Friday-to-Friday winning streak.
The tech-heavy Nasdaq seemed poised to record its fifth consecutive weekly gain.
Investors are increasingly resigned to the idea of higher and longer interest rates after the Fed’s minutes were released Wednesday, along with cautious remarks from several policymakers who expressed doubts about the reliability of the downward trajectory of inflation. Financial markets now only expect one rate cut in 2024, far from the six cuts projected earlier in the year. On the economic front, new orders for durable goods in the United States rose more than expected, while the University of Michigan’s final estimate of consumer sentiment for May rose, while inflation expectations in the short and long term have cooled. “The realization that the economy is not slowing has pushed back any interest rate cuts for the summer,” Mr. Detrick added. “July is probably off the table, but as (Fed Chair) Jerome Powell said, with inflation data improving over the summer, a September rate cut is likely to happen. .”
The Dow Jones Industrial Average gained 48.35 points, or 0.12%, to 39,113.61, the S&P 500 gained 36.3 points, or 0.69%, to 5,304.14 and the Nasdaq Composite gained added 178.46 points, or 1.07%, to 16,914.50.
European stocks closed lower and posted a weekly decline, with sentiment dampened by the re-emergence of concerns over interest rates.
The pan-European STOXX 600 index lost 0.19% and the MSCI world stock index gained 0.33%.
Emerging market stocks lost 0.71%. MSCI’s broadest index of Asia-Pacific stocks outside Japan closed 0.87% lower, while Japan’s Nikkei lost 1.17%.
Treasury yields reversed and were slightly lower after reports confirmed the U.S. economy remained resilient, which could convince the Fed not to cut interest rates this year.
Benchmark 10-year bonds rose 2/32 to yield 4.4669%, up from 4.475% last Thursday.
The 30-year bond rose 4/32 to yield 4.5729%, up from 4.58% late Thursday.
The dollar fell against a basket of global currencies but remains well-positioned to resume its advance, as stronger-than-expected economic data prompted markets to reduce expectations for interest rate cuts.
The dollar index fell 0.38%, with the euro up 0.31% at $1.0847.
The Japanese yen weakened 0.03% against the greenback to 156.98 per dollar, while the British pound traded at $1.2735, up 0.30% on the day.
Crude prices edged higher, after being under pressure for most of the week as the prospect of prolonged restrictive policy from the Fed dampened the demand outlook.
US crude rose 1.11% to settle at $77.72 per barrel, while Brent settled at $82.12 per barrel, up 0.93% on the day.
Gold prices rose but looked set to suffer their first weekly decline in three weeks on dwindling expectations for interest rate cuts.
Spot gold rose 0.3% to $2,336.03 an ounce.
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