A worse-than-expected reading on consumer sentiment kept a lid on stocks Friday, though the main indexes extended their weekly win streaks. The price action could pick up next week with several key inflation readings and an appearance from Fed Chair Jerome Powell on the docket.
The main indexes opened comfortably higher this morning but fell to their session lows after the University of Michigan said its Consumer Sentiment Index plunged to 67.4 in May from April's reading of 77.2.
"While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions," the report stated. "They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead."
Sign up for Kiplinger’s Free E-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 data also showed that both short-term and long-term inflation expectations edged higher this month.
The Consumer Sentiment Index was a "double whammy" for the Fed, says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. If consumer spending slows and inflation accelerates, "we'll get the opposite of the Goldilocks scenario that many were hoping for, and the Fed will be in an especially difficult position of choosing between accommodating a slowing economy and fighting increasing inflation expectations," Zaccarelli explains.
Sweetgreen soars after beat-and-raise quarter
Market participants also sifted through this week's final batch of corporate earnings reports. Fast-casual restaurant chain Sweetgreen (SG) surged 34% after the company beat on the top line and raised its full-year forecast. SG also said it is rolling out steak options nationally for the first time following a successful trial run in Boston.
"We believe SG represents an early stage generational growth story armed with a model in early innings of a powerful revision cycle," says Oppenheimer analyst Brian Bittner (Outperform, the equivalent of Buy), adding that Sweetgreen's quarterly results are "consistent with our 'top pick' thesis."
Novavax more than doubles on Sanofi partnership
Novavax (NVAX) was another notable post-earnings gainer, nearly doubling (+98.9%) in value Friday. While the drugmaker said first-quarter revenue rose 16% year-over-year and its net loss narrowed from Q1 2023, it was the disclosure of a new billion-dollar licensing agreement with Sanofi (SNY, +1.2%) that lit a fire under NVAX.
Under the terms of the deal, Sanofi will sell Novavax's current COVID-19 vaccine while the two companies co-develop a COVID-19/influenza combination vaccine.
On the negative side of the ledger, Akamai Technologies (AKAM) slumped 11% after the cloud services firm's lower-than-expected Q1 revenue and Q2 guidance offset a first-quarter earnings beat.
As for the main indexes, the Dow Jones Industrial Average closed up 0.3% at 39,512 – its eighth consecutive gain – the S&P 500 was 0.2% higher at 5,222, and the Nasdaq Composite had slipped 0.03% to 16,340. It was a third straight weekly win for the S&P 500 and Nasdaq, and the fourth straight for the Dow.
Powell, CPI, Walmart earnings on deck
Next week's jam-packed economic calendar and notable earnings lineup could spark volatility in the stock market. Investors are most interested in Fed Chair Powell's early morning speech on Tuesday. An update on wholesale prices is also slated for release that day, while the April Consumer Price Index (CPI) is due Wednesday morning.
Investors will also see how sticky inflation is impacting consumers' spending behavior thanks to quarterly results from blue chip retailers Home Depot (HD, -0.3%) and Walmart (WMT, +0.1%).
Related content
- Kiplinger's Earnings Calendar for This Week
- What Is Stagflation and How Can Investors Prepare?
- Analysts' Top S&P 500 Stocks to Buy Now
-
Ten Cheapest Places to Live in TexasProperty Tax Looking for a cheap place to live in Texas? Look no further. These counties have the lowest property tax bills in the Lone Star State.
-
AI Is Missing the Wisdom of Older Adults: What It Means for YouAI will increasingly affect your healthcare and finances, but young workers are primarily designing the systems and getting most of the jobs.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
Stock Market Today: Good Feelings and Solid Data Lift StocksResilience and de-escalation defined another generally positive day for financial markets.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden RisksPotential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
