Closing Comment — Friday, May 27, 2022
DJIA: 33,212.96, up 575.77
S&P 500: 4,158.24, up 100.40
Nasdaq: 12,131.13, up 390.48
Stocks rally, end historic losing streak
U.S. stocks finished broadly higher on Friday as a relief rally continued. The Dow added 575 points, bringing its five-session advance to 6.2%, while the S&P 500 climbed 2.5%, capping a weekly gain of 6.6%. Their best weekly performance since November 2020 lifted the two benchmarks into positive month-to-date territory. The Dow finally snapped an eight-week losing streak, its worst run since 1923, while the S&P 500 ended a seven-week downturn that had been its longest declining stretch since 2001. The Nasdaq Composite’s 3.3% rally lifted the tech-heavy index 6.8% higher on the week.
Recent strength in Treasuries persisted, with the yield on the 10-year note down one basis point (0.01%) to 2.74%, positioned for a monthly drop of 18 basis points (0.18%). In FOREX trading, a gauge of the U.S. dollar extended recent weakness, suffering its sharpest weekly decline in nearly four months (-1.2%).
On the data front, the core PCE deflator (the Federal Reserve’s preferred proxy for inflation) rose 4.9% year-over-year in April, easing from the previous month’s 5.2% annual gain. Separately, personal spending climbed 0.9% in April, while real personal spending (adjusted for price changes) increased 0.7%, the strongest print in three months. Rounding out the docket, a final May reading from the University of Michigan indicated consumer sentiment fell to a fresh decade-low.
All 11 S&P 500 sectors closed in positive territory, with Consumer Discretionary and Technology shares pacing gains. Ulta Beauty Inc. jumped 11.6% following upbeat results that included a boost to its full-year guidance, while Dell Technologies Inc. surged 12.9% after topping consensus profit and revenue estimates.
Midday Comment — Friday, May 27, 2022
DJIA: 32,979.34, up 342.15
S&P 500: 4,129.65, up 71.81
Nasdaq: 12,046.78, up 306.13
Stocks head for robust weekly gains
U.S. stocks are broadly higher near mid-session Friday as Wall Street looks to notch their first weekly gain in nearly two months. The Dow is climbing 342 points, on track to snap an eight week losing streak, its longest such stretch since 1923. The S&P 500 is advancing 1.8%, while the Nasdaq Composite is jumping 2.6%. Both benchmarks are positioned to end a seven week losing streak with a five-day rally of 5.9% and 6.1%, respectively. Treasuries are mixed, with the 10-year note yield down one basis point (0.01%) to 2.74%.
Economic data is in focus, with the Federal Reserve’s (Fed) preferred proxy for inflation showing signs of easing. The core PCE deflator (ex-food and energy prices) advanced 4.9% year-over-year in April, in-line with estimates and down from the previous 5.2% annual gain. Separately, personal spending climbed 0.9% in April, while personal income rose a smaller-than-expected 0.4% during the same period. Meanwhile, a final May reading from the University of Michigan showed consumer sentiment fell to a fresh decade low, declining to 58.4 from the initial print of 59.1.
Technology stocks are pacing gains, with Dell Technologies Inc. rising 12.0% after topping consensus estimates. Elsewhere, Ulta Beauty Inc. is jumping 9.6% after easily beating analysts’ expectations and raising its full-year guidance amid strong demand for personal-care products. Breadth is positive on issues by 6:1 on the NYSE and 4:1 on the Nasdaq. Composite NYSE volume is 2.0 billion shares. In FOREX trading, the U.S. dollar is extending recent weakness against a basket of its peers, heading for its biggest weekly drop in nearly four months.
Opening Comment — Friday, May 27, 2022
DJIA: 32,637.19, up 516.91
S&P 500: 4,057.84, up 79.11
Nasdaq: 11,740.65, up 305.91
Stocks set to snap seven week losing streak
U.S. futures are pointing to a muted open on Friday as Wall Street looks to snap its recent stretch of weekly losses. The Dow is up less than 0.1%, on track to advance for the first time in nine weeks, which would break the 30-stock index’s longest weekly losing streak since 1923. The S&P 500 is up 0.1% in pre-market action, while the Nasdaq 100 is trading 0.1% above fair value on the GLOBEX, positioning both benchmarks for their first weekly gain in eight weeks. Yesterday, stocks staged a broad based rally amid strong retail earnings. The Dow gained 516 points, climbing for a fifth consecutive day for the first time since mid-March. The S&P 500 rallied 2%, while the Nasdaq Composite jumped 2.7%. This morning, market participants are digesting a flurry of economic data releases. The core PCE deflator (the Federal Reserve’s (Fed) preferred proxy for inflation) advanced 4.9% year-over-year in April, in-line with estimates and easing slightly from the previous 5.2% annual gain. Separately, personal spending climbed 0.9% in April after jumping 1.4% in the prior month, while personal income rose a smaller-than-expected 0.4% during the same period. Additionally, a preliminary April print on wholesale inventories revealed a 2.1% increase during the month, while the advance goods trade deficit for the month narrowed to reflect a $105.9 billion shortfall. Rounding out the docket, a final May reading from the University of Michigan is anticipated to confirm consumer sentiment fell to the lowest level since 2011 at 59.1.
In earnings, shares of Dell Technologies Inc. (DELL) are rising 9% as the PC maker topped consensus estimates on both the top and bottom line amid particular strength in sales of business PCs and networking services. Elsewhere, cloud-software company Workday Inc. (WDAY) is falling 8.8% after falling short of Wall Street earnings expectations. In the retail space, Ulta Beauty Inc. (ULTA) is jumping 7.4% after easily beating analysts’ expectations and raising its full-year guidance amid strong demand for personal-care products. The Gap Inc. (GPS) is slumping 19.3% after dimming its forward outlook following a disappointing quarter as rising costs dent profit margins. Meanwhile, Costco Wholesale Corp. (COST) is down 1.8% as lower margins and higher inventory levels overshadow the company’s upbeat quarterly results.