After a largely mixed session, major U.S. stock indexes rallied at the close on Friday. The Dow rebounded significantly from its lowest closing level in nearly a month.
The Dow Jones Industrial Average surged 574.84 points, or 1.5%, to finish at 38,686.32. The S&P 500 climbed 42.03 points, or 0.8%, to 5,277.51 after spending most of the day in negative territory. Meanwhile, the tech-heavy Nasdaq ended virtually flat, closing down just 2.06 points, or less than 0.1%, at 16,735.02, recovering from an earlier drop of up to 1.7%.
Despite Friday's gains, the week saw losses across the board: the S&P 500 fell by 0.5%, while the Dow and Nasdaq slumped by 1.0% and 1.1%, respectively. However, all major indexes posted strong gains for the month of May.
The predominantly positive close on Wall Street followed the release of a highly anticipated Commerce Department report. The report indicated that consumer prices in the U.S. increased in line with economists' expectations for April, while core consumer prices rose slightly less than anticipated.
Specifically, the Commerce Department stated that its personal consumption expenditures (PCE) price index increased by 0.3% for the third consecutive month in April, matching economist forecasts. The core PCE price index, which excludes food and energy prices, edged up by 0.2% after a 0.3% rise in March, falling short of the expected 0.3% increase.
Annual growth rates for both the PCE price index and the core PCE price index remained unchanged from the previous month, standing at 2.7% and 2.8%, respectively—figures that were in line with expectations.
These inflation readings, preferred by the Federal Reserve, were included in the Commerce Department's report on personal income and spending. The report also noted that real personal spending, which excludes price changes, dipped by 0.1% in April after a 0.4% increase in March.
"We are in a be-careful-what-you-wish-for moment because if slowing consumer spending leads to lower inflation and the Fed is able to cut slowly as a result, then that will be good for markets," said Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance. "However, if consumer spending—and the economy—slows too quickly, then corporate profits and stock prices will decline much faster than the Fed can cut rates, so caution is warranted," he added.
### Sector News
Telecom stocks surged, driving the NYSE Arca North American Telecom Index up by 2.8%, marking its best closing level in over two months. Interest rate-sensitive utilities stocks also showed significant strength, evidenced by the 2.6% rise in the Dow Jones Utility Average.
Energy stocks performed well despite a decline in crude oil prices. Both the NYSE Arca Oil Index and the Philadelphia Oil Service Index rose by 2.4% and 2.1%, respectively. Gains were also seen in commercial real estate, banking, and transportation stocks. Conversely, computer hardware stocks weakened, dragging the NYSE Arca Computer Hardware Index down by 3.1%.
Dell Technologies (DELL) was a notable laggard, plunging 17.9% despite reporting better-than-expected first-quarter results. The company forecasted a gross margin contraction of around 150 basis points in 2025.
### Other Markets
In overseas markets, trading was mixed in the Asia-Pacific region on Friday. Japan's Nikkei 225 Index rose by 1.1%, while Hong Kong's Hang Seng Index fell by 0.8%. Major European markets all posted gains, with the UK's FTSE 100 Index rising by 0.5%, France's CAC 40 Index inching up by 0.2%, and Germany's DAX Index closing slightly above the unchanged line.
In the U.S. bond market, treasuries extended their rebound in response to the inflation data. The yield on the benchmark ten-year note, which moves inversely to its price, fell 4.0 basis points to 4.514%.
### Looking Ahead
Next week's spotlight will likely be on the Labor Department's monthly jobs report. Reports on manufacturing and service sector activity are also expected to garner attention.
