U.S. stocks jumped on Friday, with the major indexes ending a weeks-long losing streak after a string of more upbeat corporate results at least temporarily offset fears of a steep economic slide.
The S&P 500 rallied into the close, gaining 2.5% to end at 4,158.24. The blue-chip index ended a seven-week losing streak and posted its best week since Nov. 2020, rising by more than 6.5% since last Friday. The S&P 500 also erased its losses for the month of May to date.
The Dow Jones Industrial Average rose by 576 points, or 1.8%, on Friday to end at 33,212.96, and the Nasdaq Composite added more than 3% to close at 12,131.13.
Investors digested a fresh set of economic data earlier on Friday, including the latest print on core personal consumption expenditures (PCE) — the Federal Reserve’s preferred gauge of underlying inflation. These showed inflationary pressures eased only modestly in April compared to March, echoing results from the still-elevated Consumer Price Index and Producer Price Index released from earlier this month. Headline PCE increased 6.3% in April over last year compared to March’s 6.6% increase, and core PCE rose by 4.9% compared to 5.2% in the prior month. But separate data also showed personal spending, adjusted for inflation, accelerated in April compared to March.
Over the past several sessions, investors have weighed favorably the most recent batch of quarterly results and guidance from retailers like Macy’s (M), Nordstrom (JWN), Dollar General (DG) and Dollar Tree (DLTR). These companies largely exceeded Wall Street’s estimates, helping assuage concerns that the profit pressures reported recently by Walmart (WMT), Target (TGT) and Kohl’s (KSS) were reverberating equally across all consumer-facing firms. And outside of retail, airlines including JetBlue (JBLU) and Southwest (LUV) raised their sales guidance for the current quarter, suggesting demand remained strong for discretionary travel.
“Overall the U.S. consumer still remains in great shape. They came into these price hikes, this inflation, with cushion on their balance sheet. Certainly employment is high, so the overall U.S. consumer remains in a very strong place,” Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, told Yahoo Finance Live.
“The big fear was that inflation was going to continue to run away and cause the Fed to have to tighten the U.S. economy into a recession,” he added. “I think we’re all starting to gradually wake up to the reality that goods spending … was pulled forward. Inventories have been rebuilt, and goods spending has caused the inflation that you’re seeing. That’s going to roll over as people move over to service sector spending.”
“And so it may feel like a recession in some parts of the economy, but other parts of the economy are going to do well,” Schutte said. “Inflation is going to fall, and the Fed is going to go a bit easier.”
However, other strategists cast doubt on the staying power of gains seen in the market so far this week, especially as inflation has shown few meaningful signs of coming down in a substantial way to date.
“This is nothing more than a bear bounce in our opinion. When you look at these bounces we’ve had, they’ve been on very light volume, there’s not a lot of conviction,” Eddie Ghabour, co-founder and managing partner of Key Advisors Group, told Yahoo Finance Live. “The data that we’re getting now that’s been causing this sell-off, remember, is first-quarter data. The data coming in the second quarter is going to be worse than the first quarter. And we’re not going to get that news until July … So I think we’re going to have a very treacherous market in the next few months.”
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4:03 p.m. ET: Stocks post best week since Nov. 2020 as S&P 500 erases May losses
Here’s where markets closed out the session on Friday:
Gold (GC=F): +$4.50 (+0.24%) to $1,858.40 per ounce
10-year Treasury (^TNX): -2.7 bps to yield 2.7290%
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10:06 a.m. ET: Consumer sentiment weakened in late May to lowest since 2011
Consumer sentiment fell further in late May, largely on account of concerns around inflation and business conditions in the near-term.
The University of Michigan’s final monthly sentiment index decreased to 58.4, which was downwardly revised from the 59.1 previously reported for the month. Subindices tracking consumers’ views on current conditions and future expectations were each also slightly downwardly revised, and one-year inflation expectations were little changed at 5.3%.
The latest sentiment drop “was largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers’ future outlook for the economy, primarily due to concerns over inflation,” Joanne Hsu, Surveys of Consumers director, wrote in a statement. “At the same time, consumers expressed less pessimism over future prospects for their personal finances than over future business conditions.”
“Looking into the long term, a majority of consumers expected their financial situation to improve over the next five years; this share is essentially unchanged during 2022,” Hsu added. “A stable outlook for personal finances may currently support consumer spending. Still, persistently negative views of the economy may come to dominate personal factors in influencing consumer behavior in the future.”
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9:32 a.m. ET: Stocks open higher
Here were the main moves in markets as of 9:32 a.m. ET:
The advance goods trade balance showed a deficit of $105.9 for the U.S. in April, the Commerce Department said Friday. This followed a gap of $125.9 billion in March, which was upwardly revised from $125.3 billion last month.
8:42 a.m. ET: Real personal spending accelerates in April, while saving rate slides to lowest since 2008
U.S. consumers kept spending last month even as inflation remained elevated, as one of the key contributors to U.S. economic activity held up into the spring. However, the personal saving rate dwindled to the lowest level in over a decade, raising some concerns over how much longer spending might manage to prop up the economy.
Real personal spending rose 0.7% month-on-month in April, the Bureau of Economic said Friday, accelerated from March’s 0.2% rise. Unadjusted for inflation, personal spending was up 0.9%, exceeding consensus economist expectations for a 0.8% increase, according to Bloomberg data. This metric had risen by 1.1% in March.
Personal income, however, decelerated slightly last month, rising 0.4% after March’s 0.5% increase. And the personal saving rate, or proportion of disposable personal income set aside to savings, fell to 4.4% from March’s 5.0%, reaching the lowest level since 2008. After soaring during the pandemic, the saving rate has now come in well below the average of 2019 before the outbreak, when the saving rate had averaged over 7%.
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8:38 a.m. ET: Inflation eases just slightly in April as PCE rises 6.3% year-over-year
Inflation as measured by the Bureau of Economic Analysis’ personal consumption expenditures (PCE) index eased only modestly in April compared to March, with fast-rising prices showing few signs of slowing down across the U.S. economy.
The broadest measure of PCE rose 0.2% in April month-on-month, which matched consensus economist expectations, according to Bloomberg data. This compared to a 0.9% monthly increase in March. On a year-over-year basis, however, PCE still soared by 6.3%, coming in slightly hotter than expected and moderating only slightly from March’s 6.6% annual rise.
Core PCE, which excludes volatile food and energy prices, also remained hot and rose 4.9% in April over last year. That matched estimates, and followed a 5.2% rise in March. February’s reading of 5.3% had been the highest since 1983.
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7:23 a.m. ET: Stock futures rise as indexes look to log weekly gains
Here’s where markets were trading Friday morning:
S&P 500 futures (ES=F): +11 points (+0.27%) to 4,066.75
Dow futures (YM=F): +26 points (+0.08%) to 32,626.00
Nasdaq futures (NQ=F): +54.25 points (+0.44%) to 12,333.50
NEW YORK, NEW YORK – MAY 23: Traders work on the floor of the New York Stock Exchange (NYSE) on May 23, 2022 in New York City. After a week of steep losses, markets were up in Monday morning trading. (Photo by Spencer Platt/Getty Images)
Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.
I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.
Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.
Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.
NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.
Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.
The air transportation increase, it further states, will be implemented over a longer period.
It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.
Gasoline and heating fuel prices approached $5 a litre at the start of this month.
Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.
“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.
The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.
“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.
Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.
Additionally, she said the government has donated $150,000 to the Norman Wells food bank.
In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.
It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.
This report by The Canadian Press was first published Oct. 21, 2024.
TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.
The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs
It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.
The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.
Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.
Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.
This report by The Canadian Press was first published Oct. 22, 2024.
