Late-Day Rally Leads To Higher Close For Dow, S&P 500; Nasdaq Ends Little Changed

(RTTNews) - After turning in a mixed performance throughout much of the session, the major U.S. stock indexes all rallied going into the close of trading on Friday. The Dow showed a substantial move to the upside, bouncing off its lowest closing level in almost a month.

The Dow surged 574.84 points or 1.5 percent to 38,686.32, while the S&P 500 advanced 42.03 points or 0.8 percent to 5,277.51 after spending most of the day in negative territory.

The tech-heavy Nasdaq ended the day down 2.06 points or less than a tenth of a percent at 16,735.02 but showed a substantial recovery after tumbling by as much as 1.7 percent earlier in the session.

For the week, the S&P 500 fell by 0.5 percent and the Dow and the Nasdaq slumped by 1.0 percent and 1.1 percent, respectively, although the major averages all posted strong gains for the month of May.

The mostly higher close on Wall Street came following the release of a highly anticipated Commerce Department report showing consumer prices in the U.S. increased in line with economist estimates in the month of April, while core consumer prices edged up by slightly less than expected.

The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.3 percent for the third straight month in April, matching economist estimates.

Meanwhile, the report said the core PCE price index, which excludes food and energy prices, crept up by 0.2 percent in April after rising by 0.3 percent in March. Economists had expected another 0.3 percent increase.

The annual rates of growth by the PCE price index and the core PCE price index were both unchanged from the previous month at 2.7 percent and 2.8 percent, respectively. The readings matched expectations.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's report on personal income and spending.

The Commerce Department said real personal spending, which excludes price changes, edged down by 0.1 percent in April after climbing by 0.4 percent in March.

"We are in a be-careful-what-you-wish-for moment because if slowing consumer spending leads to lower inflation and the Fed is able to cut slowly as a result then that will be good for markets," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

He added, "However, if consumer spending - and the economy - slows too quickly then corporate profits and stock prices will go down much more quickly than the Fed will be able to cut rates, so we would be careful at this point."

Sector News

Telecom stocks moved sharply higher over the course of the session, driving the NYSE Arca North American Telecom Index up by 2.8 percent to its best closing level in well over two-months.

Significant strength was also visible among interest rate-sensitive utilities stocks, as reflected by the 2.6 percent surge by the Dow Jones Utility Average.

Energy stocks also saw considerable strength despite a decrease by the price of crude oil, with the NYSE Arca Oil Index and the Philadelphia Oil Service Index jumping by 2.4 percent and 2.1 percent, respectively.

Commercial real estate, banking and transportation stocks also moved notably higher, while computer hardware stocks saw substantial weakness, dragging the NYSE Arca Computer Hardware Index down by 3.1 percent.

Dell Technologies (DELL) led the sector lower, plummeting by 17.9 percent after reporting better than expected first quarter results but forecasting its gross margin will pull back roughly 150 basis points in 2025.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index jumped by 1.1 percent, while Hong Kong's Hang Seng Index declined by 0.8 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index crept up by 0.2 percent and the German DAX Index closed just above the unchanged line.

In the bond market, treasuries extended the rebound seen in the previous session in response to the inflation data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 4.0 basis points to 4.514 percent.

Looking Ahead

The Labor Department's monthly jobs report is likely to be in the spotlight next week, while reports on manufacturing and service sector activity may also attract attention.