U.S. equity indices approach within a 3% margin of their all-time highs, marking the conclusion of a victorious trading week on Wall Street.
Street Celebrates Weekly Gain, Stocks Inch Towards All-Time Highs
With a final flourish, Wall Street closed out a triumphant week on Friday, bringing U.S. stocks tantalizingly close to their previously set all-time highs. However, the bullish momentum may feel like a distant memory, considering the turmoil just a few months ago.
The S&P 500 shot up by 0.7% for a fifth straight win, marking the index's third successful week in the last four. The powerhouse index has regained nearly 3% of its previous record, set in February, following a swift plummet of roughly 20% just last month. The resurgence can be attributed mainly to increasing optimism that President Donald Trump will ease tariffs against foreign nations after securing trade agreements with them.
The mighty Dow Jones Industrial Average surged by 331 points, or 0.8%, and the tech-dominated Nasdaq composite nudged ahead by 0.5%.
Trump's trade war had sent shockwaves throughout financial markets worldwide, due to twin dangers. First, tariffs could sabotage the economy and push it into recession. Second, tariffs could trigger inflation.
This week brought a dose of welcome news on both fronts. The United States and China agreed to a 90-day respite in imposing harsh tariffs on each other, while reports on U.S. inflation surfaced better than anticipated. It's been a "week to remember," according to economists at Bank of America led by Claudio Irigoyen and Antonio Gabriel. Even so, they've expressed skepticism in regard to a substantial drop in volatility and have maintained their broader projections.
Economists are far from certain regarding the impact of tariffs on economic activity and inflation, as this uncertainty has been making its way into households and businesses. The latest U.S. consumer sentiment survey by the University of Michigan demonstrated another dip in May, although the rate of decline wasn't as steep as in previous months. Furthermore, U.S. consumers are now predicting an staggering 7.3% inflation rate in the upcoming 12 months, compared to a previous forecast of 6.5%.
Such expectations could ignite a dangerous cycle of behavior escalating inflation even further. It's essential to note that only partial U.S. consumer survey responses for the preliminary May reading were collected after the United States and China announced their 90-day truce.
In other market news, Charter Communications rose by 1.8% following the announcement of a proposed merger with Cox Communications. The resulting combined company, to be rebranded as Cox Communications and headquartered in Stamford, Connecticut, will be one of the nation's largest cable providers. CoreWeave enjoyed a 22.1% boost after Nvidia revealed an increase in its ownership stake in the company, whose cloud-based artificial-intelligence platform assists customers. Nvidia now claims a 7% ownership stake in CoreWeave, up from its 6% holding prior to CoreWeave's initial public offering in March. Novo Nordisk's stock tumbled by 2.7% after the Danish company behind the Wegovy weight loss drug announced that CEO Lars Fruergaard Jørgensen will step down, with the board now searching for his successor, citing "recent market challenges" and the stock's performance.
The S&P 500 rose by 41.45 points to 5,958.38, the Dow Jones Industrial Average climbed by 331.99 points to 42,654.74, and the Nasdaq composite appreciated by 98.78 points to 19,211.10. In the bond market, Treasury yields remained relatively stable, with the 10-year Treasury yield dipping slightly to 4.44% from 4.45% late Thursday and from above 4.50% the day before. Lower bond yields can encourage higher investments in stocks and other assets.
Hope lingers that improved signals on inflation this week could grant the Federal Reserve more flexibility to lower interest rates later in the year if high tariffs prove detrimental to the U.S. economy.
Stock indexes advanced modestly in Europe following mixed performances in Asia. Tokyo's Nikkei 225 slipped slightly by less than 0.1% after the government revealed that Japan's economy contracted more swiftly than anticipated in the first quarter of the year.
Briefs:
- Bastyr University to sell Kenmore campus, but remain in the Seattle area
- Boeing marks comeback from crisis with record Qatar air deal
- Why is Microsoft, the world's most valuable company, laying off workers?
- Seattle to Portland from Boeing Field? Airline gives route another try
- Bartell's days may be numbered as CVS looks to buy bankrupt Rite Aid's remaining stores
- The question over Microsoft's recent layoffs has been raised, despite the company being the world's most valuable.
- The government's announcement of Japan's economic contraction in Q1 has caused Tokyo's Nikkei 225 to slip slightly.
- Improved signals on inflation this week have given a glimmer of hope to the Federal Reserve, potentially allowing for flexibility to lower interest rates if necessary.
- Despite selling its Kenmore campus, Bastyr University plans to remain in the Seattle area.
