Today’s stock market: Wall Street gathers to close a more flowery | National Affairs

NEW YORK (AP) — An already rosy day for Wall Street ended with another rally, as stocks rose on Friday after a report showed that inflation is at least not getting worse.

The S&P 500 rose 0.8 percent to close its sixth month of gains in the past seven. The main measure of the health of the US stock market hit an all-time high at the end of the month, having recouped all of its losses from a rough April.

The Dow Jones Industrial Average rose nearly 575 points, or 1.5 percent, while lower prices for some big tech stocks hampered the Nasdaq composite. It fell by less than 0.1%.

Gap soared to one of the market’s biggest gains, 28.6 percent, after posting stronger profit and revenue in the latest quarter than analysts expected. The parent company of Old Navy and Banana Republic reported growth at its brands, reversing earlier declines at most of them. The retailer also raised its forecasts for sales and profitability this year, despite the outlook for the economy remaining uncertain.

Stocks were broadly boosted by lower Treasury yields in the bond market after the latest inflation reading came in roughly in line with expectations. That left open the question of when Wall Street would get the lower interest rates it wants.

The report showed that a key measure of inflation remained at 2.7 percent last month, just as forecast. Some underlying trends also improved slightly more than expected. That could bolster confidence in the Federal Reserve that inflation is moving sustainably toward its 2 percent target, something it says it needs before it cuts its key interest rate.

The Fed kept the federal funds rate at its highest level in 20 years, hoping to slow the economy enough to quell high inflation. But if it keeps rates too high for too long, it could stifle economic growth and trigger a recession that throws workers out of jobs and destroys corporate profits.

“The downside for the Fed is whether growth will slow faster than inflation,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We went from high growth to slower growth pretty quickly. The road to lower inflation has been a joy ride so far, but the last mile will be more difficult.”

Friday’s US government report showed that growth in consumer spending slowed more than economists expected. Americans’ income growth also slowed last month.

Such numbers show that businesses “need to prepare for an environment where consumers are not breaking down the way they were last year,” according to Jeffrey Roach, chief economist at LPL Financial.

After the report, the 10-year Treasury yield fell to 4.50 percent from 4.55 percent late Thursday. It topped 4.60 percent earlier in the week amid concerns about tepid demand following some Treasurys auctions, a move that hurt stocks.

The two-year Treasury yield, which more closely tracks expectations for Fed actions, fell to 4.87 percent from 4.93 percent late 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 percent chance the Fed will cut at least once by the end of the year, according to CME Group data.

Stocks in industries that tend to benefit most from easier interest rates helped lead the market on Friday. Housing stocks in the S&P 500 rose 1.9% as a group for one of the biggest gains among the 11 sectors that make up the index. Boston Properties rose 4.3%.

On the losing end of Wall Street were several tech stocks.

Dell fell 17.9%, even as it matched analysts’ profit forecasts for the last quarter. Its shares had already risen 122% in 2024 ahead of the report, meaning expectations were high and analysts were concerned about how much profit Dell is making from each dollar of revenue.

Nvidia fell for a second straight day, losing 0.8 percent as its momentum finally slows after surging more than 20 percent since last week’s earnings report. The chip company was one of the biggest weights on the S&P 500 on Friday. But its rising profits and ability to keep Wall Street frenzied for the entire AI technology industry were also big reasons for the index’s 4.8% gain for May.

Trump Media & Technology Group fell 5.3 percent in early trading after Donald Trump’s conviction on felony charges on Thursday. The company, which runs the platform Truth Social, had earlier warned in filings with US securities regulators that a Trump conviction could hurt them.

MongoDB fell 23.9% despite higher profit and revenue forecasts. The developer database company gave forecasts for profit in the current quarter and for the full year, which was below analysts’ expectations.

Overall, the S&P 500 rose 42.03 points to 5,277.51. The Dow jumped 574.84 points to 38,686.32 and the Nasdaq slipped 2.06 to 16,735.02.

In stock markets abroad, indices were mixed in Asia and Europe.

AP Business writers Matt Ott and Elaine Kurtenbach contributed.

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