- The S&P 500 closed at a record high for its best weekly performance since February.
- Economic data showed an unexpected stagnation in personal spending last month and inflation ticking higher.
- Bank stocks picked up after the Fed said lenders had passed stress tests.
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US stocks closed higher on Friday with the S&P 500 notching a record high. The benchmark index’s enjoyed its largest weekly gain since February.
Stocks pushed higher after the latest batch of economic data showed an unexpected stagnation in personal spending last month and inflation ticking higher but less than expected.
Core PCE inflation, which strips out volatile food and energy prices, jumped 0.5% in May, coming in below the median estimate of 0.6%. The gauge gained 3.4% year-over-year. The Federal Reserve uses the core measure as its primary gauge of inflation and has indicated will let inflation run above 2% for some time to facilitate a stronger labor-market recovery.
Here’s where US indexes stood at the 4 p.m. ET close on Friday:
- S&P 500: 4,280.75, up 0.33%
- Dow Jones industrial average: 34,436.81, up 0.7% (239.99 points)
- Nasdaq composite: 14,360.39, down 0.06%
Chris Zaccarelli, Independent Advisor Alliance chief investment officer, said the inflation data will likely not impact the Federal Reserve’s current plans for tapering and rate hikes. The most recent Fed official speeches suggest the central bank could begin a tapering plan in the next 6-12 months and raise rates as soon as 18 months from now, he said.
“Despite the change in direction of Fed policy, the current state of near-zero interest rates and $120/billion per month in asset purchases has created extremely loose financial conditions, which in conjunction with the vaccines and re-opening process, is what has allowed the stock market to hit all-time highs,” Zaccarelli added.
Bank stocks ended higher with Wells Fargo and Bank of America each up over 2% after the Federal Reserve said lenders had passed stress tests and could resume stock buybacks and dividend payments.
Bitcoin hovered around $32,000. Guggenheim’s Scott Minerd said the cryptocurrency could grind lower to around $15,000 before bottoming. He said investors shouldn’t rush in now.
Gold climbed 0.10% to $1778.50 per ounce.