Stocks were mostly higher on Friday as fresh inflation data came in-line with expectations. The Dow Jones Industrial Average surged over 550 points, while the S&P 500 Index rose 0.8% and Nasdaq Composite settled below the flatline. Still, all three major market averages posted a winning month for May, thanks in part from Nvidia's (NASDAQ: NVDA) explosive post-earnings run last week.
Here's how the market settled to close out the week:
S&P 500 Index (NYSE: SPY): +0.80% or +42.03 points to 5,277.51
Dow Jones Industrial Average (NYSE: DIA): +1.51% or +574.84 points to 38,686.32
Nasdaq Composite Index (NASDAQ: QQQ): -0.01% or -2.06 points to 16,735.01
Moving Markets:
Inflation rose mostly in-line with expectations in April, according to the Federal Reserve's preferred gauge released Friday, as market participants continue to look estimate the central bank's interest rate cutting timeline.
The personal consumption expenditures (PCE) price index reading for the month rose by 2.7% on an annual basis and 0.3% month-to-month, the Commerce Department reported Friday. Meanwhile core PCE, which excludes volatile food and energy prices and is closely tracked by policymakers, increased 0.2% over March and 2.8% year-over-year.
Chris Larkin, managing director of trading and investing for E-Trade at Morgan Stanley, said in a note following the report that "the Fed has suggested it will take more than one month of favorable data to confirm inflation is reliably moving lower again, so there's still no reason to think a first rate cut will come any earlier than September," quoted by CNBC, dashing some hopes for dovish policy in the summer months.
Analysts are currently pricing in a 48% chance the Fed will cut rates to a range of 5.00% to 5.25% from its current target of 5.25% to 5.50% in September, according to CME Group's FedWatch Tool.
On the Earnings Front:
Costco (NASDAQ: COST) reported fiscal third-quarter earnings after market close on Thursday, topping expectations with earnings per share of $3.78 on revenue of $58.52 billion. Notably, same-store sales, excluding fuel, rose 6.5% during the quarter, driven by growth in international business (up 8.5%), Canada (up 7.4%), and the United States (up 6%).
"As inflation has leveled off, our members are returning to purchasing more discretionary items, and growth in the category was led by toys, tires, lawn & garden and health and beauty aids," CFO Gary Millerchip said during an earnings call with analysts.
Gap (NYSE: GPS) shares popped over 25% on Friday after the apparel retailer positive comparable sales growth across all four of its brands (Gap, Banana Republic, Athleta and Old Navy) in its fiscal first-quarter and raised its full year guidance. The company is expecting net sales to rise for its fiscal year, up from its previous forecast of flat sales.
"We are on a journey to become a high-performing house of iconic American brands that shape culture. While this will take time, perseverance, and rigor, we are excited about the opportunities ahead as we unlock the power of Gap Inc.," said CEO Richard Dickson in a statement.
Dell Technologies (NYSE: DELL) shares dropped over 20% on Friday after the technology company raised concerns over its AI servers despite its first-quarter earnings beating estimates for earnings and sale. The company's Infrastructure Solutions Group unit, which includes data centers, saw sales rise 22% year-over-year to $92 billion, but its annual operating profits were flat.
For its second-quarter, Dell expects earnings of $1.65 per share on sales between $23.5 billion and $24.5 billion -- slightly above estimates. For its full year, Dell forecasts sales between $93.5 billion and $97.5 billion.
MongoDB (NASDAQ: MDB) shares also fell over 20% after the database software maker issued light forward guidance following its fiscal first-quarter earnings beat. The company expects adjusted fiscal second-quarter earnings of $0.46 to $0.49 per share on revenue of $460 million to $464 million. MongoDB also cut its 2025 fiscal year outlook to a range of $2.15 to $2.30 for adjusted earnings per share on revenue of $1.88 billion to $1.90 billion, down from its previous estimates for earnings of $2.27 to $2.49 and revenue of $1.90 billion to $1. 93 billion.
"We has a slower than expected start to the year for both Atlas consumption growth and new workload wins, which will have a downstream impact for the remainder of fiscal 2025," CEO Dev Ittycheria said in a statement.