Stocks ended higher Friday as investors reacted to a key inflation report that could cement expectations for an autumn Federal Reserve rate cut.
The Dow Jones Industrial Average surged 654 points, or 1.64%, to end the session at 40,589.34, while the S&P 500 gained 1.11% to 5,459.10 and the tech-heavy Nasdaq advanced 1.03% to finish the day at 17,357.88.
3M gained nearly 23% to $127.16 after the Dow component posted its first set of quarterly earnings under new CEO Bill Brown that included better-than-expected profits and an improved full-year outlook.
The Federal Reserve's preferred measure of inflation held steady in June, data indicated Friday, but softening trends in income and spending will likely cement the case for an autumn rate cut.
The Bureau of Economic Analysis' PCE Price Index report showed that core prices rose at an annual rate of 2.6% last month, matching last month's reading but modestly higher than Wall Street's 2.5% forecast.
“Investors are interested in taking more risk as the so-called soft landing looks more likely,” said Jeffrey Roach, chief economist for LPL Financial. “We have an economy with low unemployment with rising wages, decelerating inflation, and a Fed on the cusp of cutting rates. What more could you ask for?”
Of course, he added, “political uncertainty and headwinds from geopolitical risks could rain on that parade and that’s why investors should exhibit discernment in a market like this.”
Updated at 1:41 PM EDT
Monday earnings slate - by Liam Elias
McDonald’s (MCD) will kick off the busiest earnings week of the year with analysts looking for the world’s biggest restaurant chain to post a bottom line of $3.07 per share on sales of around $6.1 billion.
Investors will also look for updates on the impact of its $5 meal deal, which was recently extended through the summer, as foot traffic declined as a result of pushback on higher restaurant prices.
ON Semi (ON) will be the first a host of tech companies reporting next week, with the chipmaker expect to post earnings of 92 cents per share on revenues of $1.73 billion.
The group is cutting costs, and eliminating around 1,000 jobs worldwide, as it grapples with a slowdown in EV demand that is hammering sales of its drive train chips.
Royal Philips (PHG) , the Dutch-listed healthcare tech group, is expected to see earnings more than triple from last year to 27 cents per share on revenues of $4.8 billion, with investors likely focused on the impact of recalls of its breathing devices and ventilators, which resulted in a $1.1 billion settlement with the U.S government.
Updated at 11:52 AM EDT
3M, as in moving
3M shares are on pace for their biggest single-day gain on record after the Dow component posted its first set of quarterly earnings under new CEO Bill Brown that included better-than-expected profits and an improved full-year outlook.
"My job is to look forward. And while much progress has been made, we have more to do ... fortunately, we have a strong terrific team managing the exit and our ongoing legal matters," Brown told investors on a conference call Friday. "As I see it, we're still in the early innings of our operational excellence journey, and we haven't yet cracked the code on organic growth, which I know is essential to creating shareholder value."
3M shares were last marked 19.1% higher at $123.45 each in a move that would add more than $11 billion in value to the Scotch tape and Post-it note maker
$MMM this is its best day ever (in data I have going back to 1980) pic.twitter.com/A5C7nY0tzv
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) July 26, 2024
Updated at 10:03 AM EDT
Tesla bull
Tesla (TSLA) shares are nudging higher in early trading, but remain on track for a sharp weekly decline and are still in negative territory for the year, following a bullish note on the group's AI, energy and robotics potential from Morgan Stanley analyst Adam Jonas.
Related: Top analyst defends Tesla stock price target despite earnings slump
Updated at 9:38 AM EDT
Solid open
The S&P 500 was marked 42 points, or 0.78% higher in the opening minutes of trading, with the Nasdaq rising 126 points, or 0.74%.
The Dow added 420 points as it reclaimed the 41,000 mark, while the small cap Russell 2000 rose 1.25%
S&P 500 Opening Bell Heatmap (Jul. 26, 2024)$SPY +0.72%🟩$QQQ +0.70% 🟩$DJI +1.08%🟩$IWM +1.85%🟩 pic.twitter.com/4mWuj9V84e
— Wall St Engine (@wallstengine) July 26, 2024
Updated at 8:48 AM EDT
Slower spending
The Fed's preferred inflation gauge didn't provide much evidence that price pressures are moving towards its 2% target, but slowing trends in spending and income have likely cemented the case for a September rate cut.
Core prices quickened modestly, to an annual rate of 2.6%, while the headline reading held steady at 2.5%. Real personal spending slowed to 0.3%, while incomes eased to 0.2%
Stocks were little-changed following the data release, with the S&P 500 looking at a 40 point opening bell gain and the Nasdaq called 185 points to the upside.
3-month annualized change in core PCE #inflation down to +2.3% in June pic.twitter.com/0LnXMCTu4h
— Kevin Gordon (@KevRGordon) July 26, 2024
Updated at 8:21 AM EDT
SEC Sues Citron
The Securities & Exchange Commission said Friday that it's brining and enforcement action against high-profile short seller Andrew Left and his Citron Capital hedge fund.
The SEC said Left, who has made profitable bets against companies such as GameStop (GME) , manipulated the market with his research reports and social media posts.
Today we charged activist short seller Andrew Left and his firm, Citron Capital LLC, for engaging in a $20 million scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations. For more: https://t.co/mukx1loy9h
— U.S. Securities and Exchange Commission (@SECGov) July 26, 2024
Stock Market Today
Stocks ended lower again on Thursday, with elevated levels of market volatility creating whipsaw moves in all three major indices, following a stronger-than-expected reading for second quarter GDP and the ongoing selloff in megacap tech shares.
Related: GDP report jolts Fed soft-landing hopes
The Philadelphia Semiconductor sector index, a key tech benchmark, fell 1.96% yesterday to take its five-day decline just under 8%, while AI chip stalwart Nvidia (NVDA) extended its slump towards bear market territory with another 1.7% pullback.
Focus in today's session, however, is likely to switch to the release of the Fed's preferred inflation gauge, the PCE Price index, prior to the start of trading as investors look for confirmation the the central bank will begin easing in September.
Economists are looking for the headline rate to ease modestly, to an annual rate of 2.5%, with a similar downtick for the core reading for the month of June.
Benchmark 10-year notes yields, which have fallen around 7 basis points this week, were last marked at 4.241% while 2-year notes were trading at 4.429%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.02% higher at 104.377.
Heading into the start of trading on Wall Street, futures contracts tied to the S&P 500, which is now down 1.17% for the month, suggest a solid opening bell gain of around 43 points.
The Dow Jones Industrial Average, meanwhile, is priced for a 250 point gain, while the tech-focused Nasdaq is called 195 points higher.
Related: Former Fed official changes tune on what's next for interest rates
The market's key volatility gauge, however, remains firmly elevated near the highest levels in six months, and suggests daily swings of around 59 points for the S&P 500.
Early movers of note include 3M (MMM) , which jumped 5.44% in premarket trading after the industrial group posted stronger-than-expected second quarter earnings and boosted its full year profit forecast.
More Wall Street Analysts:
- Analyst revisits Nvidia stock price target after Blackwell checks
- Analysts prescribe new Walgreens stock price targets after earnings
- Analyst revises Facebook parent stock price target in AI arms race
In overseas markets, Europe's Stoxx 600 was marked 0.35% higher in Frankfurt, while France's CAC-40 jumped 0.86% ahead of the formal opening ceremony for the Olympic Games in Paris.
Overnight in Asia, Japan's Nikkei 225 ended 0.53% lower amid another broad decline in domestic tech stocks, while the regional MSCI ex-Japan benchmark slipped 0.08% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
