Eased Tightening Concerns Power Stocks Higher for the Week…..

U.S. equities finished mostly higher, notching solid weekly gains and fresh record highs along the way. The moves came amid eased concerns over global monetary policy tightening, while yesterday’s agreement between the White House and a bipartisan group of Senators on a $1.2 trillion infrastructure package also buoyed sentiment. Most sectors were in the green today, but Information Technology suffered some, keeping the Nasdaq more rangebound. In equity news, Dow member NIKE posted strong quarterly profits and offered upbeat guidance, while shares of FedEx saw pressure after it reported mixed results, and the banking sector was in focus after the Fed’s release of stress test results. On the economic front, personal income and spending figures were mixed and consumer sentiment was revised slightly lower but still up from the prior month. Treasuries were lower and the U.S. dollar was little changed, while gold nudged to the upside and crude oil prices were higher. Europe finished mixed but was able to post gains for the week, and Asia finished out in positive fashion.

The Dow Jones Industrial Average rose 237 points (0.7%) to 34,434, the S&P 500 Index increased 14 points (0.3%) to 4,281, while the Nasdaq Composite ticked 9 points (0.1%) lower to 14,360. In heavy volume, 2.8 billion shares were traded on the NYSE and 7.0 billion shares changed hands on the Nasdaq. WTI crude oil rose $0.75 to $74.05 per barrel. Elsewhere, the Bloomberg gold spot price increased $3.66 to $1,788.83 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly flat at 91.79. Markets were solidly higher for the week, as the DJIA jumped 3.4%, the S&P 500 advanced 2.7%, and the Nasdaq Composite moved 2.4% to the upside.

Personal income and spending report mixed, consumer sentiment improves month over month

Personal income declined 2.0% month-over-month (m/m) in May, versus the Bloomberg forecast of a 2.5% decrease, following April’s unrevised 13.1% drop. Personal spending came in flat, below estimates of a 0.4% gain and compared to the prior month’s upwardly-adjusted 0.9% rise. The May savings rate as a percentage of disposable income was 12.4%.

The PCE Deflator increased 0.4% m/m, below expectations of a 0.5% gain and versus April’s unadjusted 0.6% increase. Compared to last year, the deflator was 3.9% higher, in line with estimates and compared to April’s unrevised 3.6% gain. Excluding food and energy, the PCE Core Index rose 0.5% m/m, south of expectations of a 0.6% increase and versus April’s unadjusted 0.7% rise. The index was 3.4% higher y/y, matching estimates, and above April’s unadjusted 3.1% increase.

The June final University of Michigan Consumer Sentiment Index was revised lower to 85.5, versus expectations to be revised to 86.5 from the preliminary reading of 86.4. The downward revision came as both the current conditions and the expectations portions of the survey were adjusted to the downside. However, the overall index was higher versus May’s 82.9 level, as a solid improvement in the expectations component versus the prior month more than offset a slight decline in the current conditions portion. The 1-year inflation forecast came in at 4.2%, down from May’s 4.6% rate, and the 5-10 year inflation forecast decreased to 2.8% from the prior month’s 3.0% forecast.

Treasuries were mostly lower, as the yield on the 2-year note was flat at 0.27%, while the yield on the 10-year note gained 4 basis points (bps) to 1.53% and the 30-year bond rate rose 6 bps to 2.16%.

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