The New York Stock Exchange was climbing 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 stalled as expected in May at 2.6% over one year, after 2.7% in April, according to the PCE index, favored by the American central bank (Fed), and published Friday by the department Trade.
Over the month, prices remained the same, with 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 for Capital Economics said that “the return to the previous disinflationary trend and the new weakness in activity are both consistent with a reduction in interest rates by the Fed as soon as next September.
The Fed warned, during its last meeting in mid-June, that it would need to observe several months of falling inflation for the rate reduction to be launched.
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 on savings made during the pandemic,” commented Kathy Bostjancic, economist for Nationwide .
“We expect that the welcome slowdown in inflation and less sustained economic activity will lead the Fed to cut interest rates starting in September and lower them by 50 points by the end of the year,” added the economist.
On the value front, semiconductors, Nasdaq’s favorite sector with Nvidia (+2.34% around 2:10 p.m. 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 valuation mark on the stock market, gained +2.21%.
Nike shares fell 18% after mixed fourth-quarter results. At $12.6 billion, quarterly sales disappointed, with a poor performance in China.
The distributor Foot Locker lost 2.31%.
The Walgreens pharmacy and drugstore chain was in demand (+2.13%) after plunging by more than 22% the day before. The brand missed its target for its quarterly result and lowered its annual objectives, partly due to a slowdown in activity in the United States.
Shares of DJT, Donald Trump’s social network, Trump Media and Technology Group, were trading in the green, up 1.66% after a televised debate with President Joe Biden appeared to have turned in Donald Trump’s favor.
Semiconductor company Infinera soared 17.59% to $6.18 after Finland’s Nokia announced it was buying the company in a deal valued at $2.3 billion.
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