U.S. stocks were building on a record climb Friday morning as investors parsed readings on inflation and consumer spending and incomes, a day after an agreement on infrastructure spending was credited with helping lift the S&P 500 index and Nasdaq Composite to another round of records.
Nike shares were helping to power the Dow’s gains and bank stocks were on track to rise after the results of the Federal Reserve’s latest stress tests released Thursday showed the firms have enough capital to withstand a severe global recession and so can resume paying dividends and buying back stock.
What are major benchmarks doing?
- The Dow Jones Industrial Average DJIA,
+0.64% rose 132 points, or 0.4%, to 34,327. - The S&P 500 SPX,
+0.31% were up 6 points, or 0.2%, at 4,272, after establishing an intraday record high at 4,277.40. - The Nasdaq Composite Index COMP,
+0.13% gained 21 points, or 0.1%, to trade at 14,388.
On Thursday, the Dow ended 322.58 points higher, up 1%, at 34,196.82. The S&P 500 advanced 24.65 points, or 0.6%, to 4,266.49, topping its previous record finish from June 14, while the Nasdaq Composite rose 0.7%, logging its 17th record close of 2021.
What’s driving the market?
Stocks have fully recovered, and then some, from the swoon that followed last week’s Federal Reserve meeting, with the S&P 500 on track for its best week since April.
Equities were bolstered Thursday by the agreement in Washington on a roughly $1 trillion infrastructure plan, which includes around $579 billion in new spending on roads, bridges, rail and other physical infrastructure, analysts said, though President Joe Biden and congressional Democrats have signaled they will push for additional spending on education, child care and clean energy in a separate package.
Read:Infrastructure and the markets — here’s what the $1 trillion means
Separately, the Fed, after Thursday’s close, announced that temporary limits on dividend payments and share buybacks on the nation’s largest banks can end after June 30.
In Friday’s U.S. economic data, on the inflation front, the core PCE deflator, the Fed’s favored inflation gauge, rose 3.4% from 3.1% on 12-month basis. On a month-over-month basis, PCE inflation index increased 0.4% in May, while core inflation rose 0.5% in May, both below the 0.6% rise estimated by economists. The PCE is considered a broader measure of inflation as it reflects changes in consumer behavior and has a wider scope than the Labor Department’s consumer-price index.
Meanwhile, U.S. consumer spending was flat in May and consumer incomes declined 2% from April to May. Economists had expected income to fall 2.7%, while spending is expected to rise 0.4%.
The University of Michigan’s preliminary consumer-sentiment index reading for June is scheduled for release at 10 a.m. Economists expect the gauge to tick up to 86.5 from a reading of 86.4 in May.
Several Fed officials, including Cleveland Fed President Loretta Mester, Boston Fed President Eric Rosengren, and New York Fed President John Williams, are also due to speak at various events on Friday.
Which companies are in focus?
- Shares of Dow component Nike Inc. NKE,
+13.82% jumped more than 13%, after the company late Thursday topped Wall Street revenue estimates by more than $1 billion, a turnabout from the year-ago quarter when sales were pummeled by the COVID-19 pandemic. - Shares of Virgin Galactic Holdings Inc. SPCE,
+23.85% jumped more than 16% after the company said it received approval from the Federal Aviation Administration to fly passengers into space. - BlackBerry Ltd. BB,
-4.96% shares were off over 2% after the company, a popular meme stock, reported a narrower-than-expected adjusted quarterly loss and sales that beat expectations late Thursday. - Shares of big banks, including Bank of America Corp. BAC,
+1.27% , JP Morgan Chase & Co. JPM,+0.62% and Citigroup Inc. C,-0.45% , were mixed after the Fed stress tests. Shares of B.ofA. were up 0.3%, while Citi shares were down 1.4% and JPMorgan’s stock was trading 0.2% lower. - Shares of CarMax Inc. KMX,
+5.88% rose nearly 5% after reporting results early Friday that blew past Wall Street forecasts, boosted by surging demand for used cars.
How are other assets faring
- The yield on the 10-year Treasury note TMUBMUSD10Y was at 1.500%.
- 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 were inching higher, with the U.S. crude benchmark CL00 up 19 cents, or 0.3%, at $73.49 a barrel on the New York Mercantile Exchange. Gold futures GC00 were trading 0.7% higher at $1,788.30 an ounce.
- In European equities, the pan-Continental Stoxx 600 SXXP was trading virtually unchanged, while London’s FTSE 100 rose 0.3%.
- In Asia, the Shanghai Composite SHCOMP rose 1.2% and Japan’s Nikkei 225 NIK climbed 0.7%, while Hong Kong’s Hang Seng Index HSI rose 1.4%.
