NASDAQ 100, Dow Jones, S&P 500: Market Sentiment Boosted by Slowing Inflation

Highlights

• Dow and S&P 500 set for a third consecutive winning week.
• Inflation measure at its lowest in almost two years.
• Procter & Gamble, Intel, and Roku report strong earnings.

Overview

Stocks in the US experienced a notable rise on Friday, with both the Dow Jones Industrial Average and the S&P 500 poised to complete their third consecutive winning week. A key measure of inflation, closely monitored by the Federal Reserve, revealed the lowest reading in almost two years.

The Dow Jones Industrial Average surged by 177 points, equivalent to 0.5%, while the S&P 500 saw a solid gain of 0.7%. The tech-heavy Nasdaq Composite outperformed, posting an impressive 1.07% increase.

Inflation Slows: June PCE Data

Data for the personal consumption expenditures (PCE) price index in June continued to demonstrate a slowdown in inflation. The gauge indicated a 0.2% monthly gain, in line with economists’ expectations. Additionally, core PCE, which excludes volatile items like food and energy, rose 4.1% year-on-year, slightly lower than the anticipated 4.2%.

This data assumes greater significance following the recent interest rate hike by the Federal Reserve, a move that was widely anticipated. The central bank has a target of 2% annual inflation.

Procter & Gamble Beats Earnings Forecast

Amidst the ongoing earnings season, Procter & Gamble, a Dow component, saw its shares increase by over 1.1% in premarket trading on Friday. The company, known for brands like Tide, exceeded analysts’ expectations for both earnings and revenue in its latest quarter.

Investors cheered for Intel as the company reported a return to profitability, leading to a surge of over 7% in its stock price. Similarly, Roku enjoyed an 8% climb after surpassing Wall Street expectations on both revenue and profit figures.

Ford Motor’s Shares Dip

On the other hand, Ford Motor’s shares experienced a slight dip of about 1.4%, despite the automaker beating estimates and raising its guidance. Ford attributed the slower-than-expected adoption of electric vehicles to higher costs.

Earlier, Wall Street had a down day, with the Dow’s nearly 0.7% drop bringing an end to a remarkable 13-day winning streak, a length not seen since 1987. The S&P 500 and Nasdaq Composite also closed around 0.6% lower.

On-Track for Small Weekly Gains

Looking at the overall week, the Dow and the Nasdaq are on track for modest gains, with the 30-stock average up by 0.16% and the tech-heavy index gaining 0.12% as of Thursday’s close. Meanwhile, the S&P 500 remained relatively flat, posting a slight increase of only 0.02%.

Short-Term Forecast:  Resilient and Optimistic

In conclusion, the US stock market displayed resilience and optimism, with inflation data easing concerns after the Fed’s interest rate hike. Investors witnessed positive performances from companies like Procter & Gamble, Intel, and Roku, while Ford Motor faced a minor setback. As the week progressed, the market exhibited a mix of ups and downs, but still maintained an overall positive outlook.