Stocks rose on Friday as the S&P 500 notched another record closing high as investors continued to bet that inflation will be temporary as the economy continues to recovery from the coronavirus pandemic and rallied behind the White House and bipartisan senators reaching an infrastructure deal.
The S&P 500 rose 2.7% for the week, marking its best weekly gain since February. The Dow was the best performer with a 3.4% gain this week, while the Nasdaq climbed 2.4%.
Bank shares had a positive session after the Federal Reserve announced that the entire banking industry could easily withstand a severe recession. The central bank, in releasing the results of its annual stress test, said the 23 intistiul in the 2021 exam remained "well above" minimum required capital levels during a simulated economic downturn.
Here's how the market settled on Friday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Consumer sentiment slips in June:
Consumer sentiment dipped slightly in June, but still held above May's reading of 82.9, which was the highest reading since the start of the coronavirus pandemic.
The University of Michigan Final June Consumer Sentiment reading ticked down to 85.5 from 86.4 reported earlier in the month as consumers began to be more concerned towards inflation. Still, this was the second highest pandemic-era reading.
"Although consumer sentiment slipped in late June, it still remained 3.1% above the May reading, and the second highest since the start of the pandemic," said Richard Curtin, chief economist for Surveys of Consumers, in a statement. "All of the June gain was among households with incomes above $100,000, and mainly in the way they judged future economic prospects. Consumers continued to pay close attention to three critical factors: inflation, unemployment, and interest rates."
Here's how benchmarks started trading after open:
S&P 500 Index: +0.24% or +10.11 points to 4,276.55
Dow Jones Industrial Average: +0.52% or +177.81 points to 34,374.63
Nasdaq Composite Index: +0.185 or +26.03 points to 14,395.32
PCE rises in May over April, increasing inflation pressures:
Inflationary pressures accelerated in May as the economy bounces off its pandemic-depressed lows, while supply and demand mismatches further impact prices.
Personal consumption expenditures (PCE) increase by 0.4% in May over April, the Bureau of Economic Analysis said Friday. This was slightly slower than the 0.6% increase in April and the 0.5% rise expected. Still, this was the sixth straight monthly rise.
Compared to last year, PCE increased 3.9%, accelerating from April's 3.6% increase. Excluding volatile food and energy prices, core PCE climbed 3.4% in May year-over-year, rising from a 3.1% increase in April.
Personal income falls for a second straight month:
Personal income fell for a second straight month in May, according to the U.S. Bureau of Economic Analysis's monthly report, as pandemic-era fiscal programs continued to ease. Income fell a less-than-expected 2.0% in May following a 13.1% drop in April.
Personal spending was unchanged in May, falling short of the 0.4% rise expected. This followed an upwardly revised 0.9% month-on-month increase in spending in April.
Personal saving rates slipped to 12.4% in May from nearly 15% in April. The rate has come down dramatically from the pandemic-era high of more than 33% last spring.
