Last updated:9:30AM EST
Stocks opened higher on Friday amid optimism about a debt ceiling deal even as inflation continued to be red hot in April.
The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were up by 0.4%, 0.3%, and 0.4%, respectively, at 9:30 a.m. EST, May 26.
Last updated: 8:30 AM EST
The Fed’s preferred inflation gauge, the personal consumption expenditure index was up by 0.4% in April meeting expectations and increased 4.7% year-over-year. The year-over-year rise was 0.1 percentage point higher than expected. Headline inflation was also up by 0.4% and rose 4.4% from a year ago, higher than the 4.2% rate in March.
As inflation refuses to cool down, investors expect that the Fed will continue to hike interest rates in the range of 5% to 5.25% in June. According to the CME FedWatch tool, the probability of a 25-basis-point rate hike rose to 62.0% from 51.7% on Thursday.
Meanwhile, orders for manufactured goods increased sharply by 1.1% in April versus forecasts of a 0.8% decline and as compared to a rise of 3.3% in March, indicating two consecutive months of growth. This increase was largely driven by the military but reassuringly, business investment also increased by 1.4% in April. Usually, companies invest more when they expect the economy to improve, but it remains to be seen whether this uptick is just a blip or the start of a new trend.
Core durable goods, excluding transportation, declined by 0.2% in April while economists were expecting it to remain flat and rise by 0.3% in the prior month.
The trade deficit in goods shot up by 17% in April to a six-month high of $96.8 billion. Imports rebounded while exports showed a broad decline.
Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were up by 0.3%, 0.13%, and 0.10%, respectively, at 8:30 a.m. EST, May 26.
First published: 5:31AM EST
U.S. Futures remain volatile on Friday morning, as markets eagerly await progress on U.S. debt ceiling negotiations before the weekend. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down by 0.12%, 0.18%, and 0.10%, respectively, at 4:00 a.m. EST, May 26.
Both the Dow and the S&P 500 indexes are on track to finish the week on a negative footing, while the Nasdaq 100 may close with a small gain. Reports state that the House and the Capitol are nearing a two-year deal to limit government spending, before the June 1 deadline. Additionally, the overhang of Fitch’s negative watch on the U.S. credit rating remains until the deal is finalized.
Meanwhile, chipmaker Nvidia (NASDAQ:NVDA) continued to rally in yesterday’s trading session, hitting another all-time high and nearing a trillion-dollar capitalization. Nvidia’s rally pushed major semiconductor and AI stocks higher yesterday. Also, shares of retailers Gap (NYSE:GPS), Costco Wholesale (NASDAQ:COST), and Best Buy (NYSE:BBY) surged on solid quarterly results. Plus, semiconductor player Marvell Technology (NASDAQ:MRVL) jumped 17% in extended trading on a robust earnings beat and a solid AI-driven outlook.
On the economic front, the personal consumption expenditure (PCE) index, popularly considered an apt inflation gauge, is due for release today. Expectations are pegged at 4.6% year-over-year growth in April. Along with PCE, data on personal income, consumer spending and sentiment, and durable goods will be released today.
European indices are trading mixed today in anticipation of progress on the U.S. debt ceiling talks. The rally in chip stocks is also pushing up shares of Dutch chipmaker ASML Holdings (DE:ASME) today.
Asia-Pacific Markets End in the Green
Asia-Pacific indices ended the trading session in the red today, following the uncertainty of the U.S. debt limit negotiations. Hong Kong’s Hang Seng index remained closed for trading today.
Elsewhere, China’s Shanghai Composite and Shenzhen Component indices ended the trading session up by 0.37% and 0.12%, respectively.
At the same time, Japan’s Nikkei ended up 0.37% while the Topix index ended the trading day marginally down. Notably, Tokyo’s consumer price inflation (CPI) number grew by 3.2% in May, while the core-core inflation figure grew faster by 3.9%.
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