Stocks Rise After Positive Consumer Sentiment Data: Market Overview

Stocks rose after recent data revealed that US consumers had a more positive outlook on inflation in late May, raising hopes for potential Federal Reserve interest rate cuts. In a session marked by low activity, equities ended a two-day losing streak with trading volumes 25% below the monthly average. Treasuries saw minimal changes following comments from Federal Reserve Governor Christopher Waller, who suggested that factors reducing the so-called neutral rate might reverse. The bond market will close early due to the Memorial Day holiday.

"With the upcoming long weekend, we can anticipate a calm trading day," said Tom Essaye from the Sevens Report. "As shown yesterday, strong economic data is viewed as unfavorable for stocks in the near term, so markets prefer data that meets or falls slightly below expectations."

The S&P 500 increased to approximately 5,290. Nvidia Corp. moved toward a new record high following impressive earnings and a positive forecast. Meanwhile, Workday Inc. dropped 12% after reducing its subscription revenue outlook. Treasury two-year yields remained stable at 4.93%, and the dollar weakened.

"This week was characterized by 'Fed anxiety'," commented Florian Ielpo from Lombard Odier Asset Management. "Despite rising rates, corporate earnings appear robust, suggesting that the effect of positive economic news may not be as straightforward as expected."

According to Binky Chadha from Deutsche Bank AG, the S&P 500 could reach new peaks even if the Federal Reserve does not cut interest rates this year. Chadha increased his year-end forecast for the S&P 500 to 5,500, about 4% higher than Thursday's closing level.

However, Michael Hartnett from Bank of America Corp. warned that global equity markets might be overheating. He noted that 71% of equity indexes are trading above their 50- and 200-day moving averages. A reading above 88% would trigger a contrarian sell signal, he added.

Corporate Highlights

• SpaceX: Elon Musk's company is reportedly discussing selling existing shares, potentially valuing the company at around $200 billion.

• Eli Lilly & Co.: Plans to invest $5.3 billion to increase production of a key ingredient in its popular weight-loss and diabetes medications, which are currently in short supply.

• Novo Nordisk A/S: Its diabetes drug Ozempic has shown to reduce the risk of death in a kidney-disease study, highlighting its benefits for multiple health conditions.

• Bayer AG: CEO Bill Anderson described the lawsuits over its Roundup weedkiller as an "existential" threat to the company and farmers, considering a controversial legal strategy.

Market Movements

Stocks:

• S&P 500: +0.4% as of 10:08 a.m. New York time

• Nasdaq 100: +0.5%

• Dow Jones Industrial Average: Little changed

• Stoxx Europe 600: -0.4%

• MSCI World Index: +0.2%

Currencies:

• US Dollar Index: -0.2%

• Euro: +0.3% to $1.0848

• British Pound: +0.2% to $1.2727

• Japanese Yen: Little changed at 156.99 per dollar

Cryptocurrencies:

• Bitcoin: -1.1% to $67,014.91

• Ether: -2.2% to $3,674.36

Bonds:

• 10-year Treasuries: Little changed at 4.47%

• Germany’s 10-year yield: Little changed at 2.59%

• Britain’s 10-year yield: Little changed at 4.26%

Commodities:

• West Texas Intermediate crude: +0.8% to $77.46 a barrel

• Spot gold: +0.4% to $2,339.63 an ounce

Also Read: Nvidia Stock Soars on Strong AI-Driven Sales Forecast