Stocks shot higher out of the gate Friday and stayed there through the close thanks to an encouraging reading on inflation.
That data followed other recent reports showing a resilient U.S. economy – and tempered expectations for two more interest rate hikes this year.
Ahead of the opening bell, the Bureau of Economic Analysis said the May personal consumption and expenditures (PCE) index was up 0.1% month-over-month and 3.8% year-over-year. Markets were happy to see the PCE index – the Fed's preferred measure of inflation tracking consumer spending – decelerate vs April's increase. Core PCE, which excludes volatile energy and food prices, also rose at a slower pace on both a monthly and annual basis.
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.
Additionally, the data showed that personal income rose 0.4% month-over-month in May, while consumer spending ticked 0.1% higher.
"If we saw a hot inflation report, Fed swaps might have been convinced that a second-rate hike by year end was likely," says Edward Moya, senior market strategist at currency data provider OANDA.
But the opposite occurred instead. Data from the CME Group suggests futures traders are now pricing in a higher likelihood of just one more rate hike this year. The central bank is expected to raise rates by 25 basis points (0.25%) at the next Fed meeting in July.
Apple, Nike stocks top movers today
In single-stock news, Apple (AAPL) became the first U.S. company ever to close above the $3 trillion market-cap level. Shares of the blue chip stock jumped 2.3% today to $193.97, bringing its market valuation to $3.05 trillion. Apple first topped a $1 trillion market cap in August 2018, and hit the $2 trillion mark in August 2020. It briefly traded north of $3 trillion on an intraday basis in January 2021.
Friday's session wasn't as fruitful for fellow Dow stock Nike (NKE), though, which tumbled 2.7% after earnings. The athletic apparel and footwear maker said fiscal fourth-quarter earnings plunged nearly 27% year-over-year to 66 cents per share, missing the consensus estimate of 67 cents per share. Revenue was up 5% to a higher-than-anticipated $12.8 billion. Additionally, the company said gross margin fell to 43.6% due in part to elevated shipping expenses and higher markdowns.
Still, Wells Fargo analyst Irwin Boruchow (who rates NKE at Overweight, or the equivalent of Buy) likes the setup from here. "Inventory is realigned, cost pressures are set to flip, China is back above algo and revenue should accelerate from here," Boruchow wrote in a note to clients.
At the close, the Nasdaq Composite was up 1.5% at 13,787, the S&P 500 was 1.2% higher at 4,450, and the Dow Jones Industrial Average had gained 0.8% to 34,407. All three major benchmarks ended the week, month, quarter and half with impressive returns.
Warren Buffett and Apple stock
Apple's unprecedented milestone must have made many investors happy, and surely delighted one major shareholder in particular: Warren Buffett. The Oracle of Omaha's stake in the tech giant makes up nearly half of the Berkshire Hathaway equity portfolio, and for good reason. Buffett has famously said that he considers Apple the holding company's "third business," and that "it's probably the best business I know in the world."
What's more, AAPL has been one of the best dividend stocks among Berkshire's investments, paying $815 million to the firm in 2022 alone. This, of course, is due in part to Buffett's adoration for dividends, which have helped him become one of Wall Street's most skilled investors. But that's not the only reason. Kiplinger Senior Investing Writer Dan Burrows recently took a deep dive into four random facts and thoughts about Warren Buffett that have helped Berkshire Hathaway create jaw-dropping returns. They're certainly worth a closer look.
Related Content
-
We bought a vacation home for retirement, but we never use it. Should we sell, or rent it out and wait for mortgage rates to come down?We ask financial planning experts for advice.
-
Is a CD a Smart Money Move Amid Potential Rate Cuts?Knowing what's coming can help savers prepare and maximize returns.
-
Dow Retreats From a Record High: Stock Market TodayQuietly rising since April, Home Depot stock was conspicuously constructive Tuesday as high-profile tech names dragged equity indexes down.
-
Berkshire Buys the Dip on UnitedHealth Group Stock. Should You?Buffett & Co. picked up UnitedHealth stock on the cheap, with the embattled blue chip one of the newest holdings in the Berkshire Hathaway equity portfolio.
-
What Set Warren Buffett ApartAs Warren Buffett prepares for retirement, we reflect on what we've learned from his 60 years of leadership at Berkshire Hathaway.
-
Dow Jones Adds 463 Points as Rate-Cut Odds Rise: Stock Market TodaySome futures traders are now pricing in the possibility of a jumbo rate cut in September, which lifted stocks today.
-
July CPI Report Ignites a Risk-On Rally: Stock Market TodayMarket participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
Nasdaq Ends the Week at a New High: Stock Market TodayThe S&P 500 came within a hair of a new high, while the Dow Jones Industrial Average still has yet to hit a fresh peak in 2025.
-
Stocks Swing Lower as Eli Lilly, Fortinet Spiral: Stock Market TodayThe main indexes finished well off their session highs after a disappointing batch of corporate earnings reports.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
