The financial community watched as major market averages ended Friday's trading session higher after markets rallied in the late afternoon.
Leading the way up was the blue-chip Dow (dji), as it ended higher by 1.5%. At the same time, the S&P 500 benchmark index (SP500) concluded higher by 0.8%and the technology-focused Nasdaq Composite (COMP: IND) finished almost flat.
“As May draws to a close, the memory footprint it leaves behind will likely be a drop in enterprise software and semiconductor names in the final 72 hours of the month. But the truth is that May was a bright green month in the major indices,” said Alex King of Cestrian Capital Research.
“Below the surface there appears to be some rotation afoot: the Dow appears to have found support after a long decline and, as a result, in personal staff accounts we have been building positions in UDOW. We'll see if June brings gifts for grandpa or not! “We continue to look higher for longer on stocks,” King added.
From a sector perspective, all 11 S&P segments ended the day in green, with Energy and Real Estate at the top of the rankings. At the same time, the worst performing sector on Friday was information technology.
Info tech struggled the most, as shares of Dell Technologies (DELL) and MongoDB (MDB) plunged. 17.7% and 23.8% on the day, respectively. Dell Technologies fell despite its in-line first-quarter results, as the PC maker's full-year margin guidance came in weak. At the same time, MongoDB plunged following shaky first-quarter results reported last night, but investment firms recommend buying on the extreme dip.
The shift towards the Treasury market and yields saw a downward shift. The shorter US 2-year Treasury yield (US2Y) decreased 5 basis points to 4.87%. At the same time, the yield on the long-term 10-year US Treasury bond (US10Y) fell 5 basis points to 4.50%.
See here how other yields trade along the entire yield curve.
Investors focused their attention on the most recent PCE report, largely known as the Federal Reserve's favorite inflation gauge. The April Core PCE Price Index came in at +0.2% MoM compared to +0.2% consensus and +0.3% March readings; +2.8% YoY vs. +2.8% consensus and +2.8% prior.
At the same time, the PCE price index reached +0.3% monthly versus +0.3% expected and +0.3% previously; +2.7% year-on-year versus +2.7% consensus and +2.7% in March.
“The PCE is in line with expectations, but the general trend is decreasing. “This is good news for the bond market,” said Kathy Jones, chief fixed income strategist at Charles Schwab.
Additionally, the Chicago PMI unexpectedly fell in May, with data coming in at 35.4 versus the expected level of 40.8.
“Chicago PMI is now just 4.2 points above its Covid low. But that's okay, the Fed needs to keep the pressure on,” said Ian Shepherdson of Pantheon Macro.
