Benign Inflation Measure Powered Another Day Of Market Rally

Barry Adams
30 Jun, 2023
New York City

Stocks advanced on the final day of the week, quarter and first half. 

The S&P 500 index and the Nasdaq Composite index are set to extend weekly gains of near 1% as investors digest the latest news on inflation. 

Investors debated the rate path and health of the U.S. economy after a measure of inflation cooled in May. 

The Price Consumption Expenditure index, a measure of inflation, increased 3.8% in May from a year ago and rose 0.1% from the previous month, the Bureau of Economic Analysis reported Friday. 

Core PCE index, which excludes food and energy, increased 0.3% as expected and rose 4.6% from a year ago. 

The overall inflation and core inflation measures slowed from the previous month and from a year ago, extending the trends seen in the last five months. 

Investors are torn between a soft landing scenario, where rising interest rates pushes the economy in a shallow recession, and the Federal Reserve, which is struggling to contain inflation to 2% despite ten rate hikes over the last fifteen months.  

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.7% to 4,469.28 and the Nasdaq Composite edged higher 1.1% to 13,709.16.  

The S&P 500 index advanced 5.2% in June and jumped 7% in the second quarter, third quarterly gain in a row and jumped 14.5% in the first half. 

The Nasdaq Composite increased 5.1% in June, advanced 11.2% in the second quarter and soared nearly 30% in the first half of 2023. 

The yield on 2-year Treasury notes increased to 4.91%, 10-year Treasury notes inched higher to 3.86% and 30-year Treasury bonds edged up to 3.91%. 

Crude oil decreased $0.04 to $69.90 a barrel and natural gas prices decreased 3 cents to $2.67 a thermal unit. 

 

U.S. Stock Movers

Apple Inc jumped 1.2% to $191.90 on the optimism that slow but a steady rebound in the Chinese economy and new products in the U.S. will drive sales higher in the remainder of the year. 

The stock also got a boost after Citi revised higher its price target on the stock to $240. 

Nike Inc declined 2.3% to $110.06 after the company reported weaker-than-expected quarterly results. 

Savers Value Village edged lower by 2.6% on the second day of trading after surging 27% in the previous session after the for-profit thrift priced its initial public offering at $18 a share and closed at $22.90. 

Constellation Brands, Inc declined 2% to $241.90 despite the owner of Corona and Pacifico reporting better-than-expected revenue and earnings in its latest quarter. 

Dominion Energy declined 2.5% to $50.55 after the company lowered its operating earnings outlook for the second quarter because of milder-than-usual weather and unplanned outages at the Millstone Nuclear Power Station in Connecticut.