Markets: News  

The stock market finished a volatile week on a firmly higher note with the S&P 500 (+2.5%) and Nasdaq (+3.3%) rising for the third consecutive day while the Dow (+1.8%) logged its sixth advance in a row, snapping its longest weekly losing streak since 1932. Equities recorded the bulk of their gains during the first hour of action, adding to their big gains in late trade. The Nasdaq maintained its lead throughout the day while the S&P 500 and Dow returned into positive territory for the month. Today's economic data was headlined by the Personal Income/Outlays report for April. The report showed a smaller than expected increase in income and a larger than expected increase in spending, but the yr/yr deceleration in the PCE Price Index was viewed as a silver lining that could signal an inflationary peak. All eleven sectors spent the day in positive territory with six groups gaining at least 2.0%. Top-weighted technology (+3.4%) spent the day near the top of the leaderboard, alongside the consumer discretionary sector (+3.5%). The relative strength in these groups was notable since technology and retail stocks have been among the worst performers during the market's recent slide to levels not seen since early 2021. Autodesk (ADSK 211.38, +19.75, +10.3%) finished atop the tech sector after beating Q1 expectations and issuing mixed guidance for FY23 while top-weighted components like Apple (AAPL 149.64, +5.86, +4.1%) and NVIDIA (NVDA 188.11, +9.60, +5.4%) also made notable contributions to the rally. NVIDIA's strength helped the PHLX Semiconductor Index (+4.0%) finish the day ahead of the tech sector, though both groups gained 8.1% for the week. Retail stocks in the consumer discretionary sector were also a notable source of strength even though quarterly reports from the group have shown continued concerns about costs eating into margins. However, Ulta Beauty (ULTA 425.08, +47.12, +12.5%) finished ahead of other discretionary components after reporting better than expected results and guidance while Gap (GPS 11.60, +0.48, +4.3%) finished with a solid gain despite plunging nearly 15.0% at the open in reaction to its Q1 miss and below-consensus guidance. On the bright side, management indicated that performance is expected to improve in the second half of the year. The improved sentiment in the market masked continued strength in the energy sector (+1.7%), as crude oil returned to its May high. The energy sector gained 8.1% for the week, extending its May advance to 16.9% while crude oil climbed $0.64 or 0.6% to $114.77/bbl, rising $4.72 or 4.3% for the week. Treasuries had a mixed, but largely little changed, showing on Friday. The Treasury complex climbed for the third week in a row, with the 10-yr yield slipping one basis point to 2.74% today. The benchmark yield surrendered five basis points this week, pausing just above its 50-day moving average (2.73%). Reviewing today's economic data: Personal income increased 0.4% month-over-month (Briefing.com consensus 0.5%) following an unrevised 0.5% increase in March. Personal spending rose 0.9% month-over-month (Briefing.com consensus 0.6%) following an upwardly revised 1.4% increase (from 1.1%) in March. The PCE Price Index was up 0.2% month-over-month (Briefing.com consensus 0.3%) and the core-PCE Price Index, which excludes food and energy, was up 0.3% month-over-month, as expected. The key takeaway from the report is that there was a moderation in the year-over-year rates for the price indexes, which will support the peak inflation narrative. The PCE Price Index was up 6.3% year-over-year, versus 6.6% in March, and the core-PCE Price Index, the one the Fed watches most closely, was up 4.9% year-over-year, versus 5.2% in March. The final May reading for the University of Michigan's Index of Consumer Sentiment fell to 58.4 from the preliminary reading of 59.1. The final reading for April was 65.2. In May 2021, the Index of Consumer Sentiment stood at 82.9. The key takeaway from the report is that inflation concerns have negatively impacted views on buying conditions for houses and durables, and the future outlook for the economy. The advance goods trade deficit narrowed to $105.90 bln in April from a revised deficit of $125.90 bln (from -$125.30 bln) in March. Advance Retail Inventories increased by 0.7% in April after increasing a revised 3.0% (from 2.0%) in March. Advance Wholesale Inventories increased by 2.1% in April after increasing a revised 2.7% (from 2.3%) in March. Bond and equity markets will be closed on Monday for Memorial Day. On Tuesday, the market will receive the March FHFA Housing Price Index (prior 2.1%) and March S&P Case-Shiller Home Price Index (Briefing.com consensus 20.0%; prior 20.2%) at 9:00 ET, followed by May Chicago PMI (Briefing.com consensus 55.5; prior 58.5) at 9:45 ET, and May Consumer Confidence (Briefing.com consensus 103.7; prior 107.3) at 10:00 ET. Dow Jones Industrial Average -8.6% YTD S&P 400 -10.6% YTD S&P 500 -12.8% YTD Russell 2000 -15.9% YTD Nasdaq Composite -22.5% YTD