Stocks set fresh record highs on Friday, with traders hoping that a bipartisan infrastructure deal would help further stoke economic activity. Bitcoin prices tumbled as selling pressure continued for the cryptocurrency.
The S&P 500 reached an all-time high and rose just over 2.74% since last Friday for its best weekly performance since February. The Nasdaq erased earlier gains to dip into the red and end just below a record level. The Dow added more than 200 points after component Nike (NKE) jumped after posting quarterly sales growth that rebounded across all major regions. Meanwhile, FedEx (FDX) shares sank after even estimates-topping fiscal fourth-quarter results failed to wow Wall Street. Bitcoin prices (BTC-USD) pared losses to trade back above $32,000 after setting a five-month low of about $28,800 earlier this week.
Stocks extended gains from Thursday following President Joe Biden's announcement that he had reached an infrastructure agreement with a bipartisan group of senators. This helped catalyze a jump in cyclical shares including industrials and financials, with traders eying the additional federal spending on physical infrastructure and other initiatives.
The deal would include about $600 billion in new federal spending on investments for new roads, clean energy and other projects, and cost nearly $1 trillion in total over the next five years. It would be funded via provisions including stronger tax collections enforcements for the wealthy, and wireless spectrum auctions and strategic petroleum reserve sales.
"The way we're thinking about it is, it has the positive side of the deal in terms of the equity market perspective: More spending on physical infrastructure, electric vehicles, 5G and broadband, without the tax increases which would have been a negative from the equity market perspective," Gabriela Santos, global market strategist at JPMorgan Asset Management, told Yahoo Finance. "This is certainly a positive especially for the more domestic, cyclical-heavy parts of the market, as well as parts of technology like semiconductors, which are more related to the 5G and the green theme."
In a sign of the ongoing recovery still under way in the U.S., the Labor Department's weekly jobless claims report out Thursday morning showed a drop in new filings, even as the margin of improvement came in slightly weaker than expected. But in a sign of the ongoing inflationary pressures in the economy, the Bureau of Economic Analysis reported that core personal consumption expenditures (PCE), or the Federal Reserve's preferred inflation gauge, rose by 3.4% in May over last year, marking the fastest increase since 1992. Treasury yields rose following the print, and the 10-year yield broke back above 1.53%.
"We continue to like cyclical sectors, like industrials, financials and energy, and the possibility of a new spending bill is favorable for many of the companies in those sectors," Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance, wrote in an email. "However, the general reopening of the economy and renewed, post-COVID-19 economic growth is the most likely driver going forward, regardless of whether or not additional proposed legislation becomes law."
4:00 p.m. ET: Stocks set fresh record high
Here's where the three major indexes ended Friday's session:
S&P 500 (^GSPC): +14.3 (+0.34%) to 4,280.79
Dow (^DJI): +238.41 (+0.7%) to 34,435.23
Nasdaq (^IXIC): -9.32 points (-0.06%) to 14,360.39
12:45 p.m. ET: Stocks trade mixed as Nasdaq dips into the red
Here's where markets were trading Friday afternoon:
S&P 500 (^GSPC): +12.24 (+0.29%) to 4,278.73
Dow (^DJI): +245.69 (+0.72%) to 34,442.51
Nasdaq (^IXIC): -7.03 points (-0.05%) to 14,362.56
Crude (CL=F): +$0.71 (+0.97%) to $74.01 barrel
Gold (GC=F): +$0.60 (+0.03%) to $1,777.30 per ounce
10-year Treasury (^TNX): +4.4 bps to yield 1.531%
11:48 a.m. ET: 'The entire economy has less than 1% remaining to recover' BMO Capital Markets economist says
With real GDP having grown 6.4% annualized in the first three months of 2021, the U.S. economy has pulled itself rapidly from the doldrums of the COVID-19 pandemic.
Overall, "the entire economy has less than 1% remaining to recover," with the economy expected to cross the "full-recover line and then some" in the current quarter, Michael Gregory, BMO Capital Markets deputy chief economist, said in a note.
The first-quarter rise in GDP was led by durable goods manufacturing, professional services, information technology and administrative and waste management services, which together accounted for half of growth in the quarter even while constituting less than a quarter of overall GDP, Gregory added.
However, some specific areas, while posting impressive growth rates so far this year, still have a ways to go before fully reaching pre-pandemic levels of output.
"In terms of straight growth rankings in Q1, among the six strongest sectors, joining the above four industries were arts, entertainment and recreation (at #1) and accommodation and food services (#3)," Gregory said. "Both these sectors were the hardest hit by the pandemic and related restrictions. But, despite posting economy-leading growth rates, they still have a long way to go before fully recovering… around 20% for accommodation and food services… 35% for arts, entertainment and recreation."
9:31 a.m. ET: Stocks open higher, S&P 500 sets fresh record high
Here's where markets were trading after the opening bell:
S&P 500 (^GSPC): +10.11 (+0.24%) to 4,276.55
Dow (^DJI): +177.81 (+0.52%) to 34,374.63
Nasdaq (^IXIC): +26.03 (+0.18%) to 14,395.32
Crude (CL=F): +$0.23 (+0.31%) to $73.53 a barrel
Gold (GC=F): +$11.50 (+0.65%) to $1,788.30 per ounce
10-year Treasury (^TNX): unchanged to yield 1.4870%
8:35 a.m. ET: Core PCE inflation rises at the fastest rate since 1992, matching estimates
Inflationary pressures accelerated in May as the jump off last year's pandemic-depressed lows in prices, as well as supply and demand mismatches in the current economy, became more pronounced.
Personal consumption expenditures (PCE) rose by 0.4% in May over April, the Bureau of Economic Analysis said Friday. This was slightly slower than the 0.6% increase registered during the previous month month and the 0.5% rise expected, according to Bloomberg consensus data. Still, this marked a sixth straight monthly increase.
Over last year, the broadest measure of PCE increased 3.9%, the fastest rise since 2008. This accelerated from a 3.6% increase in April.
Excluding food and energy prices, the so-called core PCE rise 3.4% in May over last year, accelerating from a 3.1% increase in April. This marked the fastest increase since 1992.
8:30 a.m. ET: Personal income drops for back-to-back month in May, spending comes in unchanged
Personal income fell for a second straight month in May as a boost from federal pandemic-era assistance programs faded further, according to the Bureau of Economic Analysis' monthly report.
Income fell 2.0% in May following a 13.1% drop in April, according to the bureau. Consensus economists were looking for a 2.5% drop, according to Bloomberg-compiled data.
Personal spending registered as unchanged in May, missing estimates for a 0.4% rise. This came following a 0.9% month-on-month increase in spending in April, which was revised up from the 0.5% increase previously reported.
The personal savings rate, or proportion of personal savings to overall disposable income, dipped to 12.4% in May from nearly 15% in April. This rate has come down precipitously from the pandemic-era high of more than 33% last spring, with consumers beginning to use their pent-up savings from over the course of the pandemic.
7:25 a.m. ET Friday: Stock futures add to record levels
Here's where markets were trading ahead of the opening bell on Friday:
S&P 500 futures (ES=F): 4,260.25 +4.25 points (+0.1%)
Dow futures (YM=F): 34,181.00, +99 points (+0.29%)
Nasdaq futures (NQ=F): 14,371.25, +17 points (+0.12%)
Crude (CL=F): -$0.16 (-0.22%) to $73.14 a barrel
Gold (GC=F): +$6.10 (+0.34%) to $1,782.80 per ounce
10-year Treasury (^TNX): +0.5 bps to yield 1.492%
6:12 p.m. ET Thursday: Stock futures trade mixed
Here's where markets were trading Thursday evening:
S&P 500 futures (ES=F): 4,260.00 +4 points (+0.09%)
Dow futures (YM=F): 33,190.00, +108 points (+0.32%)
Nasdaq futures (NQ=F): 14,352.75, -1.50 points (-0.01%)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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