4:13pm: Nvidia ends the first half up 190%
The Dow closed Friday up 285 points, 0.8%, at 34,408, the Nasdaq Composite added 197 points, 1.5%, to 13,788 and the S&P 500 improved 54 points, 1.2%, to 4,450. The small-cap Russell 2000 index gained 11 points, 0.6%, to 1,892.
The Nasdaq clinched its best first half since 1983, driven in larger part by mega-cap technology stocks. Nvidia shares climbed 4% Friday and are up 190% on the year. Meta, Microsoft and Apple each added about 2%, the latter of which jumped above a $3 trillion market cap.
Even so, the bears are still making a case for caution.
“The technicals are telling us that this ubercap-led rally has just been overextended,” said Anna Han, equity strategist at Wells Fargo Securities. “It’s been hitting those overbought levels and we believe it’s time for that trade to kind of take a pause.”
12:05pm: Fed’s preferred inflation gauge continues to cool
US stocks were higher in noon trading after the core personal consumption expenditures (PCE) price index, a closely watched gauge by the Federal Reserve, rose less than expected in May.
At midday, the Dow rose 219 points to 34,341, while the S&P 500 added 44 points at 4,441 and the tech-heavy Nasdaq gained 174 points to 13,765.
“If you don’t believe disinflation is happening, you aren’t paying attention,” Harris Financial Group managing partner Jamie Cox said.
“The Fed was right to pause and needs to hold firm at these levels to prevent overcorrecting and causing an unnecessary recession to fight a beast that is now under control,” he added.
Notable movers included shares of Nike Inc, which eased nearly 3% after the apparel maker posted a weaker-than-expected 4Q profit.
9:40am: Inflation reading supports stocks
Stocks moved higher on the last trading day of the first quarter of 2023 on more economic data indicating that US economy is stronger than the Street expected.
Just after the opening bell, the Nasdaq had added 143 points or 1% at 13,734 points, the S&P 500 was up 37 points or 0.8% at 4,433 points, and the Dow Jones gained 200 points or 0.6% at 34,323 points.
The Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures (PCE) index, rose 4.6% in the 12 months that ended in May, below the 4.7% increase expected by analysts. Core PCE rose 0.3% month-over-month in May, in line with expectations.
The headline PCE rose 3.8% in the year to May, down from a 4.3% annual increase in April.
Pantheon Macroeconomics chief economist Ian Shepherdson noted that this data would not be enough to stop the Fed from hiking interest rates in July if the June CPI and payroll numbers are strong.
“Our base case, though, is that these data will be on the softer side, so we think the chance of a further hike is about 40%. And if they don’t hike in July, they’re probably done,” he said.
7:45am: Stronger start expected
US stocks are expected to make a positive start to the final session of the month, the quarter, and the first half of 2023, albeit as investors await the latest data on personal consumption expenditures (PCE), the Federal Reserve’s favored gauge for inflation.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.3% higher, while those for the S&P 500 futures added 0.4%, and contracts for the Nasdaq 100 rose 0.5%.
In Thursday trading, the DJIA jumped nearly 270 points, or 0.8% to close at 34,122, boosted by banking stocks after they all passed Federal Reserve stress tests. The S&P 500 closed 0.5% higher, but the Nasdaq Composite ended the day flat.
After a batch of strong US economic data this week, investor attention on Friday will be on May PCE data, due out at 8.30am ET. The core personal consumption expenditures price index is expected to show a 0.3% increase, after rising 0.4% in April. On an annual basis, the gauge is expected to have increased by 4.7%, unchanged from the prior month.
TickMill Group’s market analyst Patrick Munnelly commented: "In the US, recent data releases, such as the upward revision of Q1 GDP growth and lower-than-expected weekly unemployment claims, indicate that economic activity remains stronger than anticipated.
"The personal spending report for May, set to be released today, is expected to show slower growth compared to April but still indicative of overall growth in Q2. The report will also include the consumer expenditure deflator, the Federal Reserve's preferred inflation measure. Headline inflation is forecasted to experience a significant decline, while the core inflation rate is expected to remain unchanged at 4.7%, well above the Fed's target of 2%."
Noting the day's other data release, he added: "Based on expectations, the Chicago Purchasing Managers' Index (PMI) for June is anticipated to show an improvement compared to the previous month. However, it is projected to remain below the threshold of 50.0 which would suggest ongoing challenges for the manufacturing sector in the region."
Friday is a pivotal day for investors, marking not just the end of June, but also the conclusion of the second quarter and the first half.
Currently, for June, the S&P 500 has gained 5.18% and is on pace for its best monthly performance since January. The Nasdaq has advanced 5.07%, and both it and the broader market index are heading for a fourth consecutive positive month. The DJIA has climbed 3.69% in June, and it’s on track for its best month since November.
For the year to date and the first half, the S&P 500 has jumped 14.51% higher, and is heading for its best first half since 2018. The Nasdaq has surged nearly 30%, tracking for its best first half since 1983, but the DJIA has a more modest gain of 2.94%.
The three major averages are also on pace for winning weeks, with the S&P 500 and Dow up more than 1% each, and the Nasdaq tracking for a 0.7% increase