The Dow Jones rose Friday, along with the S&P 500 and especially the Nasdaq, as the stock market rally looks to rebound after Thursday’s downside reversal. Meanwhile, the Fed’s inflation readings cooled to the lowest in nearly two years while the Bank of Japan made a key policy change.
The major indexes gave up solid early gains Thursday, but the actual closing losses were modest. The Dow Jones snapped a 13-day win streak.
Intel (INTC) and Roku (ROKU) were earnings winners Friday, along with KLA (KLAC) and DexCom (DXCM). First Solar (FSLR) was a big winner at the open, but then erased gains. Oil majors Exxon Mobil (XOM) and Chevron (CVX) fell modestly.
The “Magnificent Seven” stocks of Apple (AAPL), Microsoft (MSFT), Google-parent Alphabet (GOOGL), Amazon.com (AMZN), Nvidia (NVDA), Meta Platforms (META) and Tesla (TSLA) all showed modest gains early Friday.
Elsewhere, Biogen (BIIB) will buy Reata Pharmaceuticals (RETA) for $172.50 per share in cash, or an enterprise value of $7.3 billion. BIIB stock edged lower while RETA stock skyrocketed more than 50%.
Fed’s Inflation Gauge
The June personal consumption expenditures index rose 0.2% vs. May and 3% vs. a year earlier, both matching views. That PCE inflation rate cooled from 3.8% in May.
The core PCE price index climbed 0.2%, in line with estimates. The core PCE inflation rate slowed to 4.1% from May’s 4.6%, slightly below forecasts for 4.2%.
Both annual inflation readings were the lowest since September 2021.
Fed chief Jerome Powell has said he’s focusing on service prices excluding energy and housing. The supercore inflation rate eased to 4.1% from 4.5%. The 3-month annualized rate cooled to 3.3%.
Personal income climbed 0.3% while consumer spending climbed 0.5%. Both were expected to climb 0.4%. May figures were revised slightly higher.
Meanwhile, the Labor Department’s employment cost index rose 1%, slightly lower than estimates of 1.1% and the first quarter’s 1.2% gain. The ECI, the broadest measure of labor income, rose 4.5% vs. a year earlier. That’s down from the first quarter’s 4.8%.
The inflation and labor costs data could bolster the case for an end to Fed rate hikes.
Dow Jones Today
The Dow Jones rose 0.5%, with Intel and CVX stock both Dow components. S&P 500 climbed 0.8%. The Nasdaq composite popped 1.5%, with chips and megacaps leading the way.
The 10-year Treasury yield fell 5 basis points to 3.96%. It’s possible that some of Thursday’s spike came amid buzz that the Bank of Japan would make a policy shift.
Crude oil prices held the $80 level. Copper futures climbed 1%.
Bank Of Japan Policy Tweak
The Bank of Japan, in Gov. Kazuo Ueda’s first big move since taking over, kept its official target for 10-year Japanese government bonds around 0%.
But it now says its 0.5% ceiling is a guideline, not a hard limit. The bank also said it will offer to buy 10-year debt at 1%, effectively doubling the range.
Japanese 10-year yields jumped to their highest rate in nine years.
FSLR stock initially jumped after First Solar earnings and guidance topped views. But the solar leader quickly fell back, briefly turning lower before turning slightly positive again.
INTC stock popped after Intel reported a surprise profit and gave an upbeat outlook.
Roku stock skyrocketed after the streaming web giant slashed its loss while Roku revenue and user growth topped.
KLA rose modestly on its own beat-and-raise report. KLAC stock jumped 5.35% on Thursday after rival Lam Research (LRCX) reported strong results. KLA is offering a buying opportunity Friday.
DexCom jumped above the top of a buy zone after reporting that its second-quarter earnings doubled. The diabetes products maker also raised its revenue outlook.
Exxon Mobil missed on earnings but beat on revenue. XOM stock fell modestly.
Chevron reported full second-quarter results after reporting some preliminary figures, including earnings per share, on Sunday. Revenue came in lighter than expected. CVX stock was edged lower.
Dow Jones Stock Market Rally
The Dow Jones Industrial Average declined 0.7% in Thursday’s stock market trading. The S&P 500 index lost 0.6% and the Nasdaq composite retreated 0.55%. The small-cap Russell 2000 gave up 1.3%.
The Nasdaq ended the session at 4.2% above its 50-day line, the first time it’s closed below 5% since May 25.
The market rally had started Thursday strong, especially the Nasdaq, as Meta Platforms (META) and chip stocks soared. But Meta and chip stocks pared gains, while software reversed lower, led by ServiceNow (NOW) and Microsoft (MSFT).
The 10-year Treasury yield surged 16 basis points to 4.01%. Crude oil prices climbed 1.7% to $80.09 a barrel, topping $80 for the first time since April.
Magnificent Seven Stocks
Apple stock rose 1.2% Friday. On Thursday, AAPL stock reversed lower for a slim 0.7% decline to 193.22. Apple reports earnings on Aug. 3.
Microsoft stock climbed 1.5% early Friday. MSFT stock fell 2.1% to 330.72 on Thursday, closing below its 50-day line for the first time since March 1. That followed Wednesday’s 3.8% retreat following a disappointing outlook.
Google stock climbed 2.5%. Shares on Thursday edged up 0.1% to 129.40, giving up a modest gain. GOOGL stock is still in range from a 127.10 cup-with-handle buy point after jumping 5.8% Wednesday on strong earnings.
Amazon stock advanced 2.6%, bouncing from near the 50-day line. Shares tried to do so early Thursday, but faded to close up 0.1% at 128.25. Amazon earnings are on Aug. 3.
Nvidia stock gained 1.5%. Shares rose 1% to 459 on Thursday, though off session highs.
Meta stock climbed 3.5%. Shares leapt as much as 9% on Thursday, but faded to close with a 4.4% gain to 311.71.
Tesla stock was up 2%. Shares fell 3.3% to 255.71 on Thursday. TSLA stock is working on a possible handle to a consolidation going back to September.
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