Stocks rose after recent data revealed that U.S. consumers had a more positive outlook on inflation in late May, raising hopes of possible interest rate cuts from the Federal Reserve. In a session marked by low activity, equities ended a two-day losing streak with trading volumes 25% below the monthly average. Treasuries were little changed following comments from Federal Reserve Governor Christopher Waller, who suggested that factors driving down the so-called neutral rate could be reversed. The bond market will close early due to the Memorial Day holiday.
“With the long weekend ahead, we can anticipate a quiet trading day,” said Tom Essaye of the Sevens Report. “As shown yesterday, strong economic data is considered unfavorable for stocks in the near term, so markets prefer data that meets or falls slightly below expectations.”
The S&P 500 rose to about 5,290. Nvidia Corp. advanced to a new record after impressive earnings and a positive outlook. Meanwhile, Workday Inc. fell 12% after lowering its subscription revenue outlook. Two-year Treasury yields were steady at 4.93% and the dollar weakened.
“This week was characterized by ‘Fed anxiety,'” said Florian Ielpo of Lombard Odier Asset Management. “Despite rising rates, corporate earnings appear strong, suggesting that the effect of positive economic news may not be as straightforward as expected.”
According to Binky Chadha of Deutsche Bank AG, the S&P 500 could reach new highs even if the Federal Reserve does not cut interest rates this year. Chadha raised his year-end forecast for the S&P 500 to 5,500, about 4% higher than Thursday’s closing level.
However, Michael Hartnett of Bank of America Corp. warned that global stock markets could be overheating. He noted that 71% of stock indices are trading above their 50- and 200-day moving averages. A reading above 88% would trigger a contrary sell signal, he added.
Corporate Highlights
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SpaceX: Elon Musk’s company is reportedly discussing the sale of existing shares, which could value the company at around $200 billion.
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Eli Lilly & Co.: Plans to invest $5.3 billion to increase production of a key ingredient in its popular diabetes and weight-loss drugs, which are currently in short supply.
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Novo Nordisk A/S: Its diabetes drug Ozempic has been shown to reduce the risk of death in a kidney disease study, highlighting its benefits for multiple health conditions.
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Bayer AG: CEO Bill Anderson described lawsuits over its Roundup herbicide as an “existential” threat to the company and farmers, calling it a controversial legal strategy.
Market movements
Stocks:
Coins:
Cryptocurrencies:
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Bitcoin: -1.1% to $67,014.91
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Ether: -2.2% to $3,674.36
Captivity:
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10-year Treasurys: Little change, 4.47%
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10-year German bond yield: Little change, 2.59%
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UK 10-year yield: little changed at 4.26%
Basic products:
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West Texas Intermediate crude oil: +0.8% to $77.46 a barrel
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Spot gold: +0.4% to $2,339.63 per ounce
Also read: Nvidia Stock Soars on Strong AI-Powered Sales Forecast