We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wall Street closed sharply higher on Friday, led by a strong rally of tech stocks. Investors were optimistic that inflation has already peaked and the Fed would be able to achieve a soft-landing of the economy despite tightening monetary policy. Strong economic indicators also boosted investor confidence. All three major stock indexes ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 1.8% or 575.77 points to close at 33,212.96. Notably, all 30 components of the index ended in positive territory.
The tech-heavy Nasdaq Composite finished at 12,131.13, climbing 3.3% or 390.48 points due to the strong performance of large-cap technology stocks.
The S&P 500 advanced 2.5% or 100.4 points to close at 4,158.24. All 11 broad sectors of the benchmark index closed in the positive zone. The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK) and the Real Estate Select Sector SPDR (XLRE) rallied 3.4%, 3.4% and 2.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 6.5% to 25.72. A total of 10.92 billion shares were traded Friday, lower than the last 20-session average of 13.13 billion. Advancers outnumbered decliners on the NYSE by a 6.49-to-1 ratio. On Nasdaq, a 4.13-to-1 ratio favored advancing issues.
Markets Upbeat About May FOMC Minutes
Wall Street has been extremely volatile in recent months due to soaring inflation, tightening monetary policies by the Fed and the resultant fear of the economy going into recession. However, as the Fed’s May FOMC minutes revealed that the central bank is planning to hold back on its tightening of the monetary policy, instead of sticking to its commitment to lift short-term rates, the markets approved of the same and went on a relief rally. Coupled with the fact that all economic indicators are showing that inflation may well be past its peak, investors expect the central bank to attain a soft landing and not run the economy aground with their policies.
Strong Tech Rally
Volatile markets, especially ones with a strong recessionary outlook, saw investors moving in and out of growth stocks as their future earnings outlook does not look as lucrative compared to their current valuation. Growth stocks, like large-cap tech stocks took a hit continuing the trend in recent months.
However, on Friday, as the markets reacted strongly to the signs that inflation was on the wane and that the Fed may not be a harbinger of recession, tech stocks rallied. The sector grew 3.4%. Earnings reports from giants like Dell Technologies Inc. (DELL - Free Report) also helped. Dell reported first-quarter fiscal 2023 non-GAAP earnings of $1.84 per share, beating the Zacks Consensus Estimate by 33.33%.
The Bureau of Economic Analysis in the United States reported that personal income increased $89.3 billion, or at a rate of 0.4% in April. In March, the same had grown 0.5%.
Consumer spending increased $152.3 billion in April compared to March, up 0.9%. The rate of increase in March was revised to 1.4% from 1.1%. The personal savings rate had come at 4.4% in April, as compared to 5% in March.
Core PCE inflation, which excludes food and energy prices, increased 0.3% in April. In March, it had also grown at the same rate.
PCE inflation grew at 0.7% in April. In March, it had grown 0.5%.
Consumer Sentiment for May had come down to 58.4 against a consensus of 59 for the period, as reported by the University of Michigan. In April, the index was at 59.1.
Weekly Roundup
Wall Street closed a strong week as all three major indexes brought an end to the longest weekly losing streak in decades. The Nasdaq and the S&P 500 ended seven straight weeks of losses, while the Dow’s eight weeks in the red zone was its longest since 1932. The Nasdaq Composite, the S&P 500 and the Dow went up 6.5%, 6.6% and 5.8%, respectively, over the week. Investor mood was upbeat about economic indicators, reflecting that inflation was under control, and confidence was high on the Fed policies after the May FOMC minutes were released.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Stock Market News for May 31, 2022
Wall Street closed sharply higher on Friday, led by a strong rally of tech stocks. Investors were optimistic that inflation has already peaked and the Fed would be able to achieve a soft-landing of the economy despite tightening monetary policy. Strong economic indicators also boosted investor confidence. All three major stock indexes ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 1.8% or 575.77 points to close at 33,212.96. Notably, all 30 components of the index ended in positive territory.
The tech-heavy Nasdaq Composite finished at 12,131.13, climbing 3.3% or 390.48 points due to the strong performance of large-cap technology stocks.
The S&P 500 advanced 2.5% or 100.4 points to close at 4,158.24. All 11 broad sectors of the benchmark index closed in the positive zone. The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK) and the Real Estate Select Sector SPDR (XLRE) rallied 3.4%, 3.4% and 2.8%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 6.5% to 25.72. A total of 10.92 billion shares were traded Friday, lower than the last 20-session average of 13.13 billion. Advancers outnumbered decliners on the NYSE by a 6.49-to-1 ratio. On Nasdaq, a 4.13-to-1 ratio favored advancing issues.
Markets Upbeat About May FOMC Minutes
Wall Street has been extremely volatile in recent months due to soaring inflation, tightening monetary policies by the Fed and the resultant fear of the economy going into recession. However, as the Fed’s May FOMC minutes revealed that the central bank is planning to hold back on its tightening of the monetary policy, instead of sticking to its commitment to lift short-term rates, the markets approved of the same and went on a relief rally. Coupled with the fact that all economic indicators are showing that inflation may well be past its peak, investors expect the central bank to attain a soft landing and not run the economy aground with their policies.
Strong Tech Rally
Volatile markets, especially ones with a strong recessionary outlook, saw investors moving in and out of growth stocks as their future earnings outlook does not look as lucrative compared to their current valuation. Growth stocks, like large-cap tech stocks took a hit continuing the trend in recent months.
However, on Friday, as the markets reacted strongly to the signs that inflation was on the wane and that the Fed may not be a harbinger of recession, tech stocks rallied. The sector grew 3.4%. Earnings reports from giants like Dell Technologies Inc. (DELL - Free Report) also helped. Dell reported first-quarter fiscal 2023 non-GAAP earnings of $1.84 per share, beating the Zacks Consensus Estimate by 33.33%.
Consequently, shares of Apple Inc. (AAPL - Free Report) and Microsoft Corporation (MSFT - Free Report) rallied 4.1% and 2.8%, respectively. Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Bureau of Economic Analysis in the United States reported that personal income increased $89.3 billion, or at a rate of 0.4% in April. In March, the same had grown 0.5%.
Consumer spending increased $152.3 billion in April compared to March, up 0.9%. The rate of increase in March was revised to 1.4% from 1.1%.
The personal savings rate had come at 4.4% in April, as compared to 5% in March.
Core PCE inflation, which excludes food and energy prices, increased 0.3% in April. In March, it had also grown at the same rate.
PCE inflation grew at 0.7% in April. In March, it had grown 0.5%.
Consumer Sentiment for May had come down to 58.4 against a consensus of 59 for the period, as reported by the University of Michigan. In April, the index was at 59.1.
Weekly Roundup
Wall Street closed a strong week as all three major indexes brought an end to the longest weekly losing streak in decades. The Nasdaq and the S&P 500 ended seven straight weeks of losses, while the Dow’s eight weeks in the red zone was its longest since 1932. The Nasdaq Composite, the S&P 500 and the Dow went up 6.5%, 6.6% and 5.8%, respectively, over the week. Investor mood was upbeat about economic indicators, reflecting that inflation was under control, and confidence was high on the Fed policies after the May FOMC minutes were released.