The Dow Jones Industrial Average closed at 39,512.84 on Friday, marking its eighth consecutive winning session and its best week of 2024. The S&P 500 also climbed to 5,222.68, while the Nasdaq Composite ended slightly lower at 16,340.87. The major averages wrapped up the week on a positive note, with the Dow posting a 2.16% gain, its best week since December. The S&P 500 and the Nasdaq Composite both posted their third consecutive winning week, rising 1.85% and 1.14%, respectively.
Investor enthusiasm was tempered by consumer sentiment data released on Friday morning, which showed a significant increase in inflation expectations. The preliminary May reading for the University of Michigan’s consumer sentiment index came in at 67.4, well below the Dow Jones estimate of 76. This marked the lowest reading in about six months and raised concerns about the direction of inflation. Brian Nick, senior investment strategist at the Macro Institute, noted that the data could suggest that inflation is not moving in a favorable direction and that investors are feeling uncertain about the economy and inflation trends.
The Federal Reserve’s rate-cutting decisions will be influenced by the slowdown in consumer spending and hiring, according to Nick. If these factors do not show a significant decline, it could be positive news for markets that are expecting rate cuts. The Fed has indicated that its next move is unlikely to be a hike, which could be bullish for equities. The outlook for the year has been bolstered by cooler labor data, increasing traders’ confidence in the market.
Looking ahead, the release of April’s consumer price index reading next week will be a significant test for the markets. Investors will be closely watching the data to gauge inflation trends and to assess the impact on market sentiment. The ongoing uncertainties surrounding inflation, consumer sentiment, and economic growth will continue to influence market movements in the coming weeks. Despite the positive momentum seen in recent weeks, investors remain cautious and vigilant about factors that could impact market performance.
Overall, the market showed strength and resilience during the recent winning streak, with major averages posting gains and wrapping up the week on a positive note. Investor sentiment was somewhat tempered by concerns about inflation expectations, but overall confidence in the market remains steady. The upcoming release of key economic data, including the consumer price index reading, will provide further insights into market trends and the broader economic landscape. Investors will continue to closely monitor these developments and adjust their strategies accordingly.
