New York (awp/afp) – The New York Stock Exchange climbed on Friday, with the Nasdaq and the S&P 500 promising, at this rate, closing records, after inflation slowed in the United States as expected.
At around 2:10 p.m. GMT, the Dow Jones index was up 0.69%, the Nasdaq, with a strong technology focus, was up 0.88% and the S&P 500 was up 0.69%.
Inflation slowed as expected in May to 2.6% over a year, after 2.7% in April, according to the PCE index, favored by the American central bank (Fed), and published Friday by the Commerce Department.
Over one month, prices remained the same, the inflation rate being zero, compared to +0.3% the previous month.
The annual change in PCE “decelerated to its slowest pace since 2021 and is within reach of the Fed’s 2% target,” commented Rubeela Farooqi, chief economist for High Frequency Economics.
Wall Street remained virtually frozen on Thursday, waiting for confirmation that inflation in May was on a downward slope.
The Dow Jones gained 0.09% to 39,164.06 points and the broader S&P 500 index also gained 0.09% to 5,482.87 points.
The Nasdaq, which is just a breath away from its absolute record at the close, closed up 0.30% at 17,858.68 points.
Commenting on the welcome inflation figure, Paul Asworth, economist at Capital Economics, said: “The return to the previous disinflationary trend and the renewed weakness in activity are both consistent with a Fed rate cut as early as September.”
The Fed warned at its last meeting in mid-June that it would need to see several months of falling inflation before rate cutting could be initiated.
On the bond market, ten-year yields fell to 4.26% from 4.28%.
On the consumption side, household spending grew less quickly (+0.2%) than their income (+0.5%) in May.
“Personal spending, savings and inflation are normalizing after a long period of exuberant spending and high inflation that was boosted by drawing down savings from the pandemic,” said Kathy Bostjancic, economist for Nationwide.
“We expect that the welcome slowdown in inflation and less buoyant economic activity will lead the Fed to cut interest rates starting in September and to lower them by 50 points by the end of the year,” the economist added.
On the stock market front, semiconductors, the Nasdaq’s favorite sector with Nvidia (+2.34% around 14:10 GMT) took the lead. AMD gained 1.91%, Micron Technology +1.01%, Broadcom +1.31% and Taiwan Semiconductor Manufacturing, which is approaching the $1,000 billion mark in stock market valuation, gained +2.21%.
Nike stock fell 18% after mixed fourth-quarter results. At $12.6 billion, quarterly sales disappointed, notably with poor performance in China.
The distributor Foot Locker lost 2.31%.
The chain of pharmacies and drugstores Walgreens was sought after (+2.13%) after having plunged by more than 22% the day before. The brand missed its target for its quarterly result and lowered its annual objectives, due in part to slowed activity in the United States.
The DJT action of Donald Trump’s social network, Trump Media and Technology Group was moving in the green, advancing 1.66% after a televised debate with President Joe Biden which seems to have turned to Donald Trump’s advantage.
The semiconductor company Infinera soared 17.59% to $6.18 after the Finnish Nokia announced the takeover of the company in an operation valued at $2.3 billion.
vmt/ber
