Stock market news live updates: Stocks gain as Wall Street tries to overcome inflation fears
Stocks rose on Friday, with Wall Street poised for a second consecutive session of gains after a drop in jobless claims sparked a rally, with investors struggling to calibrate a strengthening economy against rising prices.
Markets have been shaken by the prospect of inflation derailing the recovery from the pandemic, and potentially nudging the Federal Reserve to reverse its crisis-era policy sooner than expected. On Thursday, the Dow, Nasdaq and S&P managed to snap a 3-day losing streak on news that workers filing for new unemployment benefits fell to a new COVID-19 era low, their lowest in over a year.
"From our perspective, we do not anticipate that this sharp uptick will translate into a prolonged period of elevated inflation, nor do we believe the Fed is currently running the risk of a policy mistake down the road by not pulling forward its timeline on tapering and rate hikes, as some pundits are suggesting," Brian Belski, chief investment strategist at BMO Capital Markets.
"Nonetheless, there is no doubt that companies are discussing these pricing pressures, and so too are our clients," he added.
On Wednesday, minutes from the Federal Open Market Committee's (FOMC) April meeting fanned investor jitters about the interest rate outlook.
The minutes showed that "a number of participants suggested" that if the economy continues to improve rapidly, "it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases," which have currently been taking place at the aggressive rate of $120 billion per month over the past year.
That was enough to rattle the market, with traders confronting the possibility that the recovery might stir up lasting inflation — and prompt a roll-back of the Fed's accomodative monetary policy.
Companies from Procter & Gamble (PG) to Kellogg (K), to Target (TGT) and Home Depot (HD) have cited rising price pressures this year, with consumer and business demand far outstripping supply as more businesses reopen and social distancing restrictions ease.
The central bank's massive bond purchases, along with its more than year-long stretch of maintaining interest rates near zero, have helped support both economic activity and asset prices amid the pandemic.
Still, however, FOMC members "generally noted that the economy remained far from the Committee’s maximum-employment and price-stability goals," the minutes added.
Meanwhile, cryptocurrency prices have stabilized since earlier this week, when reports of potential Chinese regulatory action and public remarks by Tesla CEO Elon Musk sparked an ugly rout. Bitcoin (BTC-USD) briefly swooned to levels close to $32,000 before recovering to trade above $40,000.
However, at least a few Wall Street watchers are starting to question the viability of the crypto surge.
“What’s true for glamour and style might also be true for Bitcoin,” wrote Deutsche Bank’s Marion Labouré in a note to clients on Thursday. “Just as a ‘fashion faux pas’ can happen suddenly, we just received the proof that digital currencies can also quickly become passé.”
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10:30 a.m. ET: 'Tim Cook, please take the stand...'
Apple (AAPL) CEO Tim Cook will take the witness stand Friday morning in the company's closely watched court battle with "Fortnite" developer Epic.
Cook's testimony will prove to be an important piece of Apple's defense, as it seeks to fend off allegations that it operates its App Store as an illegal monopoly, Yahoo Finance's Dan Howley explains.
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10 a.m. ET: Housing market showing signs of fatigue
Existing home sales fell 2.7% to a seasonally adjusted 5.58 million in April, from a month earlier, according to the National Association of Realtors (NAR). While that number was below market expectations, and the latest bit of data that suggests the real estate boom is cooling, April sales activity was up 33.9% from the same month a year earlier when the nation was under a lockdown due to the coronavirus pandemic.
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9:40 a.m. ET: Consumer prices 'quickly coming back to life'
In a sobering research note, JPMorgan Chase noted that consumer prices are "quickly coming back to life" after last year's marginal gain. In fact, prices have surged 4.6% in the first 4 months of 2021 alone, in part attributed to oil and commodities.
With that being said, the bank noted that core CPI advanced at a 2.6% gain from January to April — underscoring why investors are so spooked:
Global core goods price gains have been persistently high, with inflation holding at its fastest pace in two decades since last summer. This upward pressure has been accompanied by a more recent sharp acceleration in global services price inflation.
We see two forces behind the jump in core inflation: 1) supply constraints slowing production relative to boomy demand and 2) a normalization of last year’s services activity and price collapse. Past experience suggests that these forces have only limited effects, with core inflation recovering only gradually over the expansion and prices remaining depressed through the subsequent expansion. Industrial supply has traditionally been elastic and bottleneck pressures in the form of “speed limit” effects are hard to identify. Statistical evidence also points against mean-reversion in the level of prices.
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9:30 a.m. ET: Stocks pop at the open bell
Here were the main moves at the start of the trading day:
S&P 500 (^GSPC): 4,177.58, +18.46 (+0.44%)
Dow (^DJI): 34,253.93, +169.78 (+0.50%)
Nasdaq (^IXIC): 13,599.44, +63.71 (+0.47%)
Crude (CL=F): $63.37 per barrel, +$1.43 (+2.31%)
Gold (GC=F): $1,888.00 per ounce, +$6.10 (+0.32%)
10-year Treasury (^TNX): -0.02 bps to yield 1.613%
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7:30 a.m. ET: Friday: Stock futures gain, point to 2nd day of gains
Here were the main moves in markets Friday morning:
S&P 500 futures (ES=F): 4,167.75, +13.50 (+0.32%)
Dow futures (YM=F): 34,147.00, +119.00 (+0.35%)
Nasdaq futures (NQ=F): 13,529.75, +43.25(+0.32%)
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6:15 p.m. ET Thursday: Stock futures open flat
Here were the main moves in markets Thursday evening:
S&P 500 futures (ES=F): down 1 point at 4,153.25
Dow futures (YM=F): up 5 at 34,025
Nasdaq futures (NQ=F): up 5.5 points at 13,489
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