The major averages opened slightly higher aCentre County Reporter a tech-led rally and the latest inflation data, with hopes of a debt ceiling deal boosting sentiment.
Early on and the S&P 500 (SP500) won 0.2%the dow (DJI) picked up 0.3% during the Nasdaq Composite (COMP.IND) advanced from 0.3%.
At the start of Friday, the S&P 500 (SP500) is down 1%, the Dow (DJI) is down 2%, but the Nasdaq (COMP.IND) is up 0.3%.
“Yesterday’s gains for stocks were actually very modest and were entirely driven by the big tech stocks,” said Deutsche Bank’s Jim Reid.
There is reportedly a framework for a debt ceiling agreement that caps federal spending for two years.
There is “a little more optimism about the debt ceiling now, particularly aCentre County Reporter comments from Speaker McCarthy suggested a deal was close and that he would be in town over the long weekend to work on a deal,” he said Reid.
The yield on 10-year government bonds (US10Y) gained 2 basis points to 3.83%. The 2-year return (US2Y) rose 8 basis points to 4.59%.
“Markets are in the process of readjusting valuations to the levels that prevailed just before the collapse of the Silicon Valley bank,” ING said. “US 10-year Treasury yields are back above 3.80% and the 4% level doesn’t seem that difficult anymore. A 25 basis point hike is now almost fully priced in through July, with forward funds rates topping just above 5.30%.”
On the economic front: April personal income and expenses Numbers have arrived. Spending rose +0.8% mom vs. +0.4% exp. Personal income was in line with forecasts at +0.4% m/m. At the same time, the PCE price index rose to +0.4% m/m compared to the previous reading of +0.1%.
Also April Durable goods orders rose to 1.1% M/M in April, compared to the expected 1% decline and 3.3% growth in March.
“Some aspects of inflation have been extremely bad empirically,” said Paul Donovan of UBS. “The US experienced the biggest drop in durable goods inflation in the nearly 70-year history of the measure. The drop of more than 20 percentage points is more than double the previous record. There is no toughness here. Other economies have also experienced durable goods.” Inflation rates on goods are rapidly slipping into disinflation regardless of demographics and deglobalization.”
Among active stocks, Marvell rallied on earnings and guidance exceeded estimates.