It was a mixed finish to a strong month for stocks as investors weighed an encouraging inflation update against another round of disappointing tech earnings and a selloff in several mega-cap names.
Starting with the inflation data. Ahead of the open, the Bureau of Economic Analysis said the Personal Consumption and Expenditures (PCE) Price Index, which measures consumer spending, was up 0.3% from March to April, matching what was seen the month prior and arriving in line with economists' predictions. The annual increase in the PCE index was also unchanged at 2.7%.
Core PCE, which excludes volatile food and energy costs, ticked lower on a monthly basis in April, to 0.2% from March's 0.3%, while the year-over-year increase stayed the same. The data also showed consumer spending rose at a lower-than-expected 0.2% monthly rate in April, while personal incomes rose 0.3%.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The PCE Price Index didn't show much progress on inflation, but it didn't show any backsliding either, " says Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.
September rate-cut odds edge up after PCE report
Still, investors will have to remain patient, Larkin adds. "The Fed has suggested it will take more than one month of favorable data to confirm inflation is reliably moving lower again, so there's still no reason to think a first rate cut will come any earlier than September," he notes.
Indeed, according to CME Group's FedWatch Tool, futures traders are pricing in a strong chance the Fed will keep interest rates steady at its June (99% probability) and July (85%) meetings. The odds of a quarter-point rate cut in September are currently at 47%, up from 45% one day ago.
The inflation data helped all three indexes open higher Friday. The blue chip Dow Jones Industrial Average (+1.5% at 38,686) and broader S&P 500 (+0.8% at 5,277) held their gains through the close as Salesforce (CRM, +7.5%) bounced back from Thursday's earnings-related drubbing.
The tech-heavy Nasdaq Composite (-0.01% at 16,735), meanwhile, rallied back from a nearly 2% intraday decline but still ended in the red.
Dell, MongoDB sink after earnings
Negative earnings reactions from several tech stocks weighed on investor sentiment. Most notable was a 17.9% decline for Dell Technologies (DELL). While the PC maker beat top- and bottom-line estimates for its fiscal first quarter, its second-quarter earnings guidance came up short. The company also said it expects its gross margin rate to decline as artificial intelligence (AI) costs ramp up.
MongoDB (MDB) was another post-earnings decliner, spiraling 23.9% after its quarterly results. The database platform provider reported higher-than-expected earnings and revenue for its fiscal first quarter but lowered its full-year guidance amid weak consumption growth.
Still, Needham analyst Mike Cikos maintained a Buy rating on the tumbling tech stock. "We view MongoDB as an emerging industry leader with strong products attacking a large market opportunity," Cikos says. And while the analyst admits that the market will need time to digest the MDB's disappointing guidance and consumption outlook, he expects growth to reaccelerate next year.
A selloff in several Magnificent 7 stocks amplified headwinds for the broad market for most of Friday too. Amazon.com (AMZN, -1.6%) created the biggest drag. And while Nvidia (NVDA) fell 0.8%, it finished the month up 27% thanks to last week's blowout earnings report.
Related content
- When Is the Next Jobs Report?
- Costco Stock Falls Despite Earnings Beat. Here's Why
- Ulta Stock Falls After Lowering Outlook: What To Know
-
When Checkout Charity Gets Uncomfortable — and Maybe Even IllegalCashiers asking customers to 'round up' their total for charity can cross an ethical line if there's no disclosure about the benefiting organization.
-
Four Ways to Find Free Money to Pay for College: Affluent Families Can Apply, TooFamilies can access scholarships, grants and incentives by strategically positioning their students in terms of merit, skills and timing.
-
3 Tax-Smart DAF Strategies Advisers Can Put to Work for Clients During Giving SeasonDonor-advised funds can help clients maximize their philanthropy through front-loading deductions, donating appreciated assets and 'bunching' contributions.
-
How Financial Advisers Can Turn Compliance Into a Competitive AdvantageCollaboration, transparency and education can strengthen compliance and empower financial advisers to thrive.
-
Nasdaq Rises 2.7% as Musk Tweets TSLA Higher: Stock Market TodayMarkets follow through on Friday's reversal rally with even bigger moves on Monday.
-
Holidays Are a Rich Time to Talk Money With Young Adults: A Financial Adviser's Guide for ParentsThe most productive family financial conversations start with open-ended questions and a lot of listening. Don't let this opportunity pass you by.
-
How Women of Wealth Are Creating a New Model of Giving Through Family OfficesWomen who are inheriting wealth today are shifting from traditional philanthropy to creating sustainable systems to fund philanthropic gifts into perpetuity.
-
I'm a Financial Planner: This Retirement GPS Helps With Navigating Your Drawdown PhaseReady to retire? Here's how to swap your 'peak earnings' mindset for a 'preserve-plus-grow' approach instead of relying on the old, risky 4% rule.
