NEW YORK โ An already booming May for Wall Street ended with another push higher as stocks rose on Friday after a report showed inflation at least not getting worse.
The S&P 500 rose 0.8% to close its sixth winning month in the last seven. The main measure of the health of the US stock market hit a record high at the end of the month after recovering all its losses from a difficult April.
The Dow Jones Industrial Average jumped nearly 575 points, or 1.5%, while falling prices for some big tech stocks slowed the Nasdaq composite. It fell less than 0.1%.
Gap soared to one of the market's biggest gains, up 28.6%, after generating higher profits and revenue in the latest quarter than analysts expected. The parent company of Old Navy and Banana Republic reported growth across all of its brands, reversing earlier declines for most of them. The retailer also raised its sales and profitability forecasts for this year despite saying the outlook for the economy remains uncertain.
Overall, stocks got a boost from falling Treasury yields in the bond market after the latest reading on inflation It arrived approximately as expected. That left open the question of when Wall Street will get the lower interest rates it craves.
The report showed that a key measure of inflation remained at 2.7% last month, exactly as forecast. Some underlying trends also improved a little more than expected. This could bolster confidence in the Fed that inflation is sustainably headed toward its 2% target, something it says it needs before doing so. cut its main interest rate.
The Federal Reserve has been keeping the federal funds rate at the highest level in more than 20 years in hopes of slowing the economy enough to quell high inflation. But if it keeps rates too high for too long, it could stifle growth in the economy and cause a recession that puts workers out of jobs and destroys business profits.
"The issue for the Fed is whether growth will slow faster than inflation," said Brian Jacobsen, chief economist at Annex Wealth Management. โWe've gone from high growth to slower growth quite quickly. The road to lower inflation has been a joyride so far, but the last stretch will be more challenging.โ
Friday's U.S. government report showed consumer spending growth weakened more than economists expected. Americans' income growth also slowed last month.
These figures show that companies โneed to prepare for an environment in which consumers are not spending as they did last year,โ according to Jeffrey Roach, chief economist at LPL Financial.
Following the report, the 10-year Treasury yield fell to 4.50%, from 4.55% late Thursday. It had surpassed 4.60% earlier in the week amid concerns about tepid demand following some Treasury bond auctions, a move that had hurt stocks.
The two-year Treasury yield, which more closely tracks expectations for Fed action, fell to 4.87%, from 4.93% on Thursday.
Virtually no one expects the Federal Reserve to cut interest rates at its next meeting in a week and a half. But traders are betting on a nearly 85% chance that the Federal Reserve will cut at least once before the end of the year, according to CME Group data.
Stocks in industries that tend to benefit most from lower interest rates helped lead the market on Friday. S&P 500 real estate stocks rose 1.9% as a group, one of the biggest gains among the 11 sectors that make up the index. Boston Properties rose 4.3%.
On the losing side of Wall Street were several technology stocks.
Dell fell 17.9% despite meeting analysts' profit forecasts in the latest quarter. Its shares had already soared 122% in 2024 before the report, meaning expectations were very high, and analysts flagged concerns about how much profit Dell is making per dollar of revenue.
Nvidia fell for the second day in a row, losing 0.8%, as its momentum finally slows after soaring more than 20% since its launch. spectacular earnings report last week. The chip company was one of the heaviest weights on the S&P 500 on Friday. But its rising profits and its ability to keep the frenzy on Wall Street going for the entire AI technology industry were also big reasons for the index's 4.8% gain in May.
Trump's media and technology group fell 5.3% in its first following operations the condemnation of Donald Trump for felonies on Thursday. The company, which runs the Truth Social platform, had previously warned in filings with US securities regulators that a Trump conviction could harm it.
MongoDB fell 23.9% despite beating profit and revenue forecasts. The developer database company gave earnings forecasts for the current quarter and the full year that fell short of analysts' expectations.
In total, the S&P 500 rose 42.03 points to 5,277.51. The Dow Jones jumped 574.84 points to 38,686.32, and the Nasdaq fell 2.06 points to 16,735.02.
In foreign stock markets, indices were mixed in Asia and Europe.
AP Business writers Matt Ott and Elaine Kurtenbach contributed.
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