Stocks Rise as Key Fed-Watched Inflation Data Continues to Fall

U.S. stocks rose Friday as the latest reading of a closely watched inflation gauge extended the story of slowing inflation and investors absorbed the fallout from the Biden-Trump debate.

The S&P 500 (^GSPC) rose about 0.1% after the benchmark index neared its record high. The tech-heavy Nasdaq Composite (^IXIC) rose 0.3%, while the Dow Jones Industrial Average (^DJI lost about 0.1%

Stock indexes are looking at an upbeat ending after a turbulent week that saw the S&P 500 and Nasdaq return from a three-day losing streak. With stocks expected to post a bumper first half after the final trading day of June, the swings have stoked fears of a downturn for the rest of the year.

The last significant data point from the first six months of the year came in the form of the Fed’s favorite inflation gauge. Yahoo Finance’s Josh Schafer reported that inflation eased in May as prices rose at their slowest pace since March 2021.

The core personal consumption expenditures (PCE) index, which excludes the cost of food and energy and is closely monitored by the Fed, rose 0.1% in May from the previous month, in line with Wall Street expectations.

Meanwhile, with the US elections in November high on the list of risks, investors have taken note of President Joe Biden’s poor performance in his first debate against presumptive Republican nominee Donald Trump. Tax cuts and a trade crackdown promised by the former president are seen as likely to boost stocks. Shares of Trump Media & Technology Group (DJT) jumped in morning trading.

The market is also on alert for new signs that consumer resilience is waning, as major companies report a weakening sales outlook. Nike (NKE) stock fell more than 15% in early trading, while Walgreens (WBA) stock remained under pressure following Thursday’s 22% drop.

Live5 updates

  • Stock Trends in Morning Trading

    Here are some of the stocks topping Yahoo Finance’s trend tickers page during morning trading on Friday.

    Trump Media and Technology Group (DJT): After the first 2024 presidential debate between former President Donald Trump and current Commander in Chief Joe Biden, the company’s shares soared before falling about 2%. Biden’s performance was widely seen as choppy, marked by moments of confusion, making it appear as if Trump had won the night. The company is the parent company of Trump’s social media platform, Truth Social.

    Nike (OF): The sportswear retailer fell nearly 20% Friday morning after the company forecast a larger-than-expected sales decline in 2025, with an expected 10% drop in the first quarter.

    Infinera (INFN): Shares of the telecommunications equipment maker jumped 17% after Nokia reached an agreement to buy the company for $2.3 billion. The deal values ​​Infinera at a 28% premium to the stock’s closing price on Wednesday.

    Chewy (BLOW): The online pet food supplier lost almost 10% following a volatile move triggered by an article on X by influential trader Keith Gill, known as Roaring Kitty. Gill’s account posted a photo of an animated dog on Thursday, with no elaboration or context, prompting investors to dive into Chewy. But that sudden rise was accompanied by a fall Friday morning, highlighting the sudden and erratic movements in meme stock trading.

  • Stocks Rise as Fed’s Favorite Inflation Gauge Shows Further Slowdown

    U.S. stocks rose Friday as the latest reading of the Fed’s preferred inflation gauge showed inflation continues to ease, raising the likelihood of a rate cut in the coming months.

    The S&P 500 (^GSPC) rose about 0.1% after the benchmark index closed one step closer to its record high. The tech-heavy Nasdaq Composite (^IXIC) rose 0.3%, while the Dow Jones Industrial Average (^DJI) rose about 0.1%.

  • Fed’s preferred inflation gauge shows prices rising at slowest pace since March 2021

    The latest reading from the Fed’s preferred inflation gauge showed inflation fell in May, with prices rising at their slowest pace since March 2021.

    The core personal consumption expenditures (PCE) index, which excludes the cost of food and energy and is closely monitored by the Federal Reserve, increased 0.1% in May from the previous month , in line with Wall Street expectations and slower than the 0.3% increase. increase observed in April.

    In May, core PCE rose 2.6% from a year earlier, in line with estimates and unchanged from the annual increase seen in the past two months. The May figure marked the smallest annual increase in more than three years.

  • Trump Media on the Move

    After President Joe Biden’s shaky debate performance, Trump Media & Technology (DJT) stock is on the move.

    As of this writing, shares were up 7.5% in premarket trading.

    Be aware of what you are negotiating here, my friends.

    Here’s the company’s latest quarterly report, showing a “company” doing something and losing a lot of money doing it.

  • Nike shares trampled

    Just as bad to watch (sort of…) as last night’s debate is Nike (NKE) stock in premarket trading, down 14% as of this writing.

    The company’s guidance has been a real disappointment, and concerns persist about its direction’s execution on product innovation. Not seeing better guidance from Nike in an Olympic year is a red flag.

    I liked Stifel analyst Jim Duffy’s take on the quarter:

    “The FY25 guide (the 5th consensus downgrade in 6 quarters) pushes the outlook for growth inflection further into 2025 (perhaps FY4 or spring 2025 at the earliest), asking investors to both buy into the success of unproven styles and consider an uncertain consumer discretionary backdrop through 2HCY24 until momentum can strengthen again in 2HCY25. Management credibility is seriously challenged and the potential for regime change at the C-level adds additional uncertainty. A November investor day will likely present a multi-year business model with lower returns than the previous one, adding risk to the premium enjoyed by the historical multiple. We remain sympathetic to the N-scale advantage in a category with secular growth tailwinds and structural margin potential but, given the current valuation, we cannot support a compelling upside case until the growth inflection becomes more tangible.”

    Duffy downgraded his rating on Nike to hold this morning.

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