The Dow Jones Industrial Average closed higher on Friday, marking its fourth consecutive weekly gain, as the market rally extended amidst a flurry of mostly positive quarterly results. However, signs of stubborn inflationary pressures have clouded the outlook for potential rate cuts in the near term.
At the closing bell at 4:00 PM ET (9:00 PM GMT), the Dow climbed 125 points, or 0.3%, while the S&P 500 edged up 0.1%. Conversely, the NASDAQ Composite finished just below the flatline, down 0.03%. Throughout the week, major Wall Street indexes posted gains ranging between 1% and 2%.
Consumer Sentiment Dampens Amid Inflation Concerns
The University of Michigan Survey of Consumers reported a decline in sentiment for May, with the index dropping to 67.4 from April’s 77.2. Notably, one-year inflation spiked to 3.5%, compared to 0.4% the previous month. These figures underscore consumer apprehensions regarding escalating price pressures, coinciding with a cautious stance from Federal Reserve officials regarding potential rate adjustments.
Minneapolis Fed President Kashkari echoed this sentiment on Friday, expressing caution regarding the current interest rate levels and not ruling out the possibility of a rate hike.
Earnings Season Boosts Market Confidence
Amidst ongoing earnings releases, investor sentiment remained buoyant, largely fueled by better-than-expected quarterly performances.
Sweetgreen Inc (NYSE:SG) stole the spotlight with its upgraded full-year guidance and robust quarterly results, propelling its shares up by 34%. Conversely, cloud services firm Akamai Technologies (NASDAQ:AKAM) experienced a downturn after reporting disappointing guidance for the current quarter and beyond, leading to an 11% decline in its stock price.
Taiwan Semiconductor Manufacturing (NYSE:TSM) emerged as a standout performer in the chip sector, surging 4.5% following a substantial revenue increase in April. However, Unity Software (NYSE:U) faced headwinds, tumbling over 10% to a 52-week low after missing quarterly earnings estimates.
Earnings Outlook Surpasses Expectations
Over 80% of S&P 500 companies have reported first-quarter results, with earnings on track to increase by 7.8%, surpassing the previously estimated 5.1% growth in April, according to LSEG IBES.
Pharma Stocks Experience Mixed Fortunes
Novavax (NASDAQ:NVAX) experienced a significant surge, more than doubling in value, following its partnership agreement with French drugmaker Sanofi (NASDAQ:SNY) to develop a Covid vaccine starting next year. Conversely, Moderna (NASDAQ:MRNA) faced a setback, with its stock declining by 4% after announcing a delay in the approval of its vaccine for respiratory syncytial virus by the Food and Drug Administration, attributed to administrative constraints within the agency.
