31/05/24 Briefing

• US indices rallied after a promising PCE report.

• The S&P 500 and Dow rallied, while the Nasdaq traded mostly flat.

• Investors were encouraged by inflation that met expectations, increasing Fed rate-cut chances.

US indexes finished mostly higher on Friday after a key inflation metric left investors encouraged.

The S&P 500 and Dow Jones Industrial Average rose, while the Nasdaq Composite was flat. Nvidia, Microsoft, and Amazon all fell.

Friday's also offered investors inflationary relief, as the Personal Consumption Expenditures report came in line with expectations. As projected, core PCE rose 0.2% in April. On an annualized basis, it increased 2.8%, slightly above consensus of a 2.7% gain.

""The equity market wants to see a slowdown in economic growth and today's PCE data provided a soft-landing report," David Donabedian said, chief investment officer of CIBC Private Wealth US.

That means it's still possible for the Federal Reserve to cut interest rates this year. Adding to this notion was last week's downward GDP revision, which showed that consumer spending was softer-than-thought.

"The revised GDP report released on Thursday should also keep the possibility of 1 – 2 rate cuts on the table this year as consumer spending cooled in the first quarter.  While these latest economic reports may keep the bulls running within US large caps, US small cap companies, which are more rate sensitive, may remain stalled until we have a better indication of when the first rate cut will occur," Eric Sterner, CIO at Apollon Wealth Management, said.

Here's where US indexes stood at the 4:00 p.m. closing bell on Friday: 

• S&P 500: 5,277.51, up 0.8%

• Dow Jones Industrial Average: 38,686.32, up 1.5% (575 points)

• Nasdaq Composite: 16,735.02, down less than 0.1%

Here's what else happened today:

• Why investors should buy the dip before next week's jobs report, according to Fundstrat's Tom Lee.

• Two companies made up 24% of Nvidia's revenue in the first quarter. One might be Microsoft, UBS says.

• Tariff-caused inflation could hold back Fed interest rates, S&P Global says.

• Trump Media fell 9% after the former president's felony conviction.

In commodities, bonds, and crypto: 

• West Texas Intermediate crude oil slumped by 1.41% to $77.10 a barrel. Brent crude, the international benchmark, slid 0.71% to $81.29 a barrel.

• Gold fell 1.12% to $2,371 an ounce.

• The 10-year Treasury yield slid five basis points to 4.49%.

• Bitcoin dropped 1% to $67,651.