4:07pm: Benchmarks close the week out strong
The Dow closed Friday up 176 points, 0.5%, at 35,459, the Nasdaq Composite added 267 points, 1.9%, to 14,317 and the S&P 500 improved 45 points, 1%, to 4,582. The small-cap Russell 2000 index gained 26 points, 1.4%, to 1,981.
The Dow, after snapping a 13-session winning streak Thursday, secured its third consecutive winning week, along with the S&P 500.
A batch of positive economic data this week lifted investors' spirits.
“In the wake of stronger than expected GDP, and a better-than-expected earnings season, this could be the catalyst to send the market to new highs,” wrote Gina Bolvin, president of Bolvin Wealth Management Group.
12:05pm: Dow on track for third straight winning week
US stocks were higher in noon trading after the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation measure, rose at the smallest pace since September 2021.
At midday, the Dow gained 216 points to 35,499 while the S&P 500 added 48 points at 4,586 and the tech-heavy Nasdaq rose 279 points to 14,329.
“The US stock market made a comeback on Friday, as the Fed’s favoured measure of inflation fell more than anticipated, reducing the likelihood of another interest rate hike in September,” IG chief market analyst Chris Beauchamp said.
Notable movers included shares of Intel Corporation, which climbed 7% after the semiconductor giant posted better-than-expected 2Q financial results.
9:35am: Data fits soft landing narrative
US stocks moved higher at the open on Friday buoyed by further evidence inflation is cooling.
The personal consumption expenditures (PCE) price index increased just 3% in June, at the lowest level since March 2021, down from 3.8% in May. It rose 0.2% month-over-month in June, up from 0.1% in the previous month.
The decrease was driven by falling gas prices and a slowdown in grocery cost growth.
The core PCE index, which removes the more volatile food and energy components and is the Federal Reserve’s preferred inflation gauge, rose 4.1% from a year ago, below the expected 4.2%.
This marked the lowest rate since September 2021 and was a decrease from May’s reading of 4.6%.
It rose 0.2% month-over-month, which was in line with the Dow Jones estimate.
The Commerce Department’s data also showed that consumer spending remains resilient, up 0.5% to $110.4 billion in June.
“This morning’s US macro data is another nice combination that fits the soft landing narrative the market is currently enamoured with,” ING chief international economist James Knightley said.
“This should give us greater confidence that the Fed's focal point on inflation - core services ex shelter – will continue to slow, just as goods prices and housing are slowing and we can realistically get back to the 2% target without much further, if any, policy tightening.”
Just after the market opened, the Nasdaq had added 167 points or 1.2% at 14,216 points, the S&P 500 was up 34 points or 0.7% at 4,571 points, and the Dow Jones had gained 170 points or 0.5% at 35,452 points.
7:45am: Inflation data eyed
US blue chips are expected to push higher on Friday, recovering after a retreat in the previous session following a strong run on the back of central bank rate decisions and corporate earnings, as investors await the release of the Federal Reserve's preferred inflation gauge.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.3% higher, while those for the S&P 500 gained 0.5%, and contracts for the Nasdaq 100 added 0.9%.
On Thursday, the DJIA dropped 237 points, or about 0.7% at 35,282, ending a 13-day win streak, a run not seen since 1987. Meanwhile, the S&P 500 and Nasdaq Composite both closed around 0.6% lower.
On a weekly basis, the DJIA and the Nasdaq are on track for narrow gains, up around 0.16% and 0.12% gain, respectively, as of Thursday’s close, while the S&P 500 is almost flat on the week, up only 0.02%.
Earnings reports posted after-hours on Thursday saw chipmaker Intel jump more than 7% as investors applauded a return to profitability, while streaming devices group Roku climbed 8% after beating Wall Street expectations on both the top and bottom lines.
On the corporate earnings slate on Friday, consumer products giant Procter & Gamble is expected to report before the bell.
On the economic front, investors will be eyeing the June personal consumption expenditures (PCE) price index, with forecasts for a core PCE gain of 0.2% from the previous month and 4.2% when compared with a year earlier.
Investors will also watch for data on employment costs, personal income, consumer spending and consumer sentiment.
Naeem Aslam, chief investment officer at Zaye Capital Markets commented: "Traders are going to be focused on the Fed’s favourite economic data, which is the Core PCE index, which is expected to show further improvement. Remember, the Fed Chairman said in his report that he wants to keep the door open for further measures, and all decisions are very dependent on economic data.
"In addition, we will also get to see the US Consumer sentiment data, and any improvement in these economic numbers is likely to boost confidence among traders to support the US equity market, which had a wild week due to earnings and central bank meetings."