U.S. stocks finished Friday’s session in mixed fashion, but wrapped up the trading week with solid gains as inflation reads throughout the week seemed to dampen some concerns in regard to the Fed taking a more aggressive path to policy tightening. Healthcare stocks outperformed, Treasury yields ticked slightly higher and the U.S. dollar continued its recent pullback. Crude oil prices moved to the downside and gold experienced a minor decline.

The Dow Jones Industrial Average (DJIA) rose 92 points (0.4%) to 24,831, the S&P 500 Index gained 5 points (0.2%) to 2,728, and the NASDAQ Composite dipped 2 points to 7,403. In moderate volume, 712 million shares were traded on the NYSE and 2.1 billion shares changed hands on the NASDAQ. WTI crude oil ticked $0.66 lower to $70.70 per barrel and wholesale gasoline shed $0.01 to $2.18 per gallon. Elsewhere, the Bloomberg gold spot price decreased $2.34 to $1,319.26 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% lower at 92.54. Markets were solidly higher for the week, as the DJIA jumped 2.3%, the S&P 500 Index rallied 2.4%, and the NASDAQ Composite surged 2.7%.

The Import Price Index rose 0.3% month-over-month (m/m) for April, below the Bloomberg projection of a 0.5% gain, following March’s downwardly revised 0.2% decline. Compared to last year, prices were higher by 3.3%, south of forecasts of a 3.9% increase and matching March’s downwardly revised gain.

The May preliminary University of Michigan Consumer Sentiment Index remained at April’s 98.8 level, compared expectations of a dip to 98.3. The current economic conditions component of the survey declined modestly and the expectations portion improved. The 1-year inflation forecast ticked higher to 2.8% from 2.7%, and the 5-10 year inflation forecast remained at the prior month’s 2.5% rate.

Treasuries ticked slightly lower, with the yields on the 2-year and 10-year notes ticking nearly 1 basis point higher to 2.54% and 2.97%, respectively, while the 30-year bond rate was little changed at 3.10%.

Treasury yields attempted to rebound from yesterday’s slip and the 10-year note remains below the 3.00% level it breached last month for the first time in over four years, while the U.S. dollar pared a rally that has taken the greenback to a four-month high. Concerns that the Fed may be forced to accelerate rate hikes this year have been eased following the past three days of cooler-than-expected inflation reports. Meanwhile, the economic and earnings backdrops have remained solid, although the latter has been countered by lofty expectations, and the markets have shrugged off lingering global trade and geopolitical uncertainties. Finally, crude oil prices have surged to multi-year highs to boost the energy sector but the move could foster uneasiness regarding the potential impact on the all-important U.S. consumer.

U.S. stocks finished the week solidly higher, moving back into positive territory for the year, courtesy of the continued cooling of concerns regarding an accelerated Fed rate tightening campaign. Last week’s labor report that showed wage pressures were subdued was followed by a host of cooler-than-expected wholesale, consumer and import price inflation reports. The U.S. dollar’s surge paused and Treasury yields nudged higher to help the financial sector but the 10-year note failed again at an attempt to stay above the 3.00% mark. The tame inflation reports were also met with signs the economy remains solid, with small business optimism unexpectedly improving and JOLTS’ job opening report hitting a record. Energy stocks led the charge as crude oil prices extended a surge to levels not seen since late 2014, bolstered by the highly-telegraphed decision to pull out of the Iran nuclear deal and a bullish oil inventory report. M&A activity remained heated up and earnings season continued to show strength as it headed down the home stretch. Of the 445 companies in the S&P 500 that have reported thus far, about 72% have topped sales estimates and nearly 78% have exceeded profit projections, per data compiled by Bloomberg.

Schwab Center for Financial Research – Market Analysis Group

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