Dow climbs over 100 points as inflation reading hits 13-year high

How are stock benchmarks trading?

• The Dow Jones Industrial Average was trading 110 points higher to reach 34,570, a gain of 0.3%
• The S&P 500 index advanced 12 points, or 0.3%, at 4,212.
• The Nasdaq Composite Index was up 66 points, or 0.5%, to reach about 13,806.

On Thursday, the Dow DJIA, +0.31% closed up 141.59 points, or 0.41%, to 34,464.64; the S&P 500 index SPX, +0.24% finished up 4.89 points or 0.12% at 4,200.88; the Nasdaq Composite slipped 1.72 points or 0.01% to 13,736.28. The small-cap Russell 2000 index RUT, -0.22% closed up 1.1%, or 23.80 points, to reach 2,273.07.

Weekly and monthly statistics

As of Thursday’s close, the Dow was on pace for a weekly gain of 0.7%, and on track for a monthly rise of 1.7%, marking its fourth monthly gain in a row.

The S&P 500 was up 1.1% on the week thus far and aiming for a gain in May of 0.5%, also marking its fourth straight monthly advance.

The Nasdaq was set for a weekly gain of around 2% but a 1.6% decline in the month to date.

The Russell was headed for a weekly return of 2.6% and a monthly gain of 0.3%, which would mark its eighth straight monthly gain and its longest such win streak since 1995.

What’s driving equity trading?

U.S. equity market investors are hoping to close out the week and head into June with major indexes near all-time highs, but first Wall Street must sort through the Federal Reserve’s preferred measure of inflation, the personal-consumption expenditure index.

The U.S.’s PCE inflation rate approached its highest level in nearly 13 years at 3.6%, higher than the 2.9% that economists’ surveyed by Dow Jones had forecast. That marks the highest level since 2008. On a month-over-month basis, PCE inflation rose 0.6% in April, while the core rate up rose 0.7%.

The core price index, which strips out volatile food and fuel prices, rose 3.1% in the year through April — marking the fastest pace since 1992.

That reading on inflation comes as U.S. consumer incomes dropped 13.1% in April after government stimulus checks for Americans ended, but consumer spending climbed 0.5% last month, matching consensus estimates.

Fed policy makers are increasingly debating the timing of paring back easy-money measures implemented during the worst of the coronavirus pandemic, especially after an April report on job creation came in weaker than expected and readings of the consumer price index have run hot, suggesting that the economy is overheating.

Dallas Fed President Robert Kaplan during an interview on CNBC on Thursday said that he is ready to start to talk about reducing the Fed’s $120 billion a month in asset purchases, citing excess in the real-estate market as one reason for a pullback in accommodation.

“At this stage as opposed to a year ago, these mortgage purchases for example might be having some unintended consequences and side effects, which I think we need to weight against their efficacy,” he told the business network, reiterating past comments that he has made.

“I think it would be wise sooner rather than later to begin gently taking our foot off the accelerator, so we can avoid and reduce the probability of having to apply the brakes down the road,” he said.

Meanwhile, investors are also watching for details on a $6 trillion budget proposal for the 2022 fiscal year expected to be released later Friday by President Biden’s administration, which could further support the economic rebound but also is being watched for an increase in debt issuance. Detail of Biden’s budget plan is expected at 2 p.m.

In addition to the PCE data, investors will watch for a reading of Chicago-area manufacturing activity, the Chicago PMIs, which is due at 9:45 a.m., and a reading of consumer sentiment due at 10 a.m.

Which companies are in focus?

• Shares of Dow component Salesforce Inc. CRM, +5.90% were rising after the enterprise software company reported better-than-expected first-quarter results late Thursday.
• HP Inc.‘s stock HPQ, -8.80% was in focus after the company reported better-than-expected fiscal second-quarter results.
• “Meme” stocks have been in focus lately, with shares of AMC Entertainment AMC, +15.83%, surging more 119% so far this week and those for videogame retailer GameStop Corp. GME, -4.11% were up by about 44% over the period.
• Boeing Co. shares were in focus on Friday after WSJ reported that the aeronautics company halted deliveries of its 787 Dreamliners, adding fresh delays for customers.
• Shares of Eton Pharmaceuticals Inc. ETON traded lower after the company said the Food and Drug Administration issued a complete response letter, saying it cannot approve Eton’s application for its methanol poisoning treatment in his current form.

How are other assets faring?

• The yield on the 10-year Treasury note TMUBMUSD10Y were at around 1.61%, little changed after data. Yields and bond prices move in opposite directions.
• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.2%.
• Oil futures traded higher, with the U.S. benchmark CL00 up 36 cents, or 0.5%, at $67.21 a barrel on the New York Mercantile Exchange, after rising to the highest front-month contract settlement since Oct. 29, 2018, according to Dow Jones Market Data.
• Gold futures GC00 were down $2.90, or 0.2%, at $1,895.50 an ounce, but headed for a solid weekly gain.
• The Stoxx Europe 600 index SXXP was trading up 0.5%, while London’s FTSE 100 UKX rose 0.3%.
• The Shanghai Composite SHCOMP finished 0.2% lower, while Hong Kong’s Hang Seng Index HSI edged up 0.1%. Japan’s Nikkei 225 NIK rallied 2.1%.