The Dow Jones Industrial Average closed Friday above the key 40,000 level for the first time in history, a day after hitting that benchmark in the previous trading session.
The 30-stock average rose 134.21 points, or 0.34%, to 40,003.59. The S&P 500 inched up 6.17 points, or 0.12%, to 5,303.27, while Nasdaq Composite ended down 12.35 points, or 0.07%, at 16,685.97.
Shares of Walmart and Caterpillar, both trading 1% higher, led the Dow. Chubb and Valero Energy, respectively up more than 3% and 4%, were the biggest gainers in the S&P 500.
Stocks finished the week strong, with the Dow up 1.2% to notch its fifth straight weekly gain. The S&P 500 and Nasdaq climbed 1.5% and 2.1% week to date, cinching their longest winning streak since February.
On Thursday, the Dow reached an intraday high of 40,051.05, above the psychologically important 40,000 level, before pulling back to end the day down 0.1%.
This week's ascent has helped propel the three indexes into positive territory for the second quarter despite a tough start. The S&P 500 and Nasdaq are now each up more than 11% in 2024, while the Dow has climbed more than 6% this year.
While concerns over the durability of the current rally have been voiced by some investors, Tom Hainlin believes that the combination of economic growth and decelerating inflation is the perfect catalyst.
Money Report
"That's a fairly optimistic setup for at least the near future here in 2024," the senior investment strategist at U.S. Bank Asset Management told CNBC. "We appreciate that valuation is a little high relative to history, but so is earnings growth and so is earnings stability."
Correction: This story was updated to correct the day of the week.
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Dow closes at a record high above 40,000
The Dow Jones Industrial Average rose to another record close on Friday afternoon.
The 30-stock index rose 134.21 points, or 0.34%, to settle at 40,003.59. The benchmark had first crossed over the 40,000 mark for the first time on Thursday morning.
The S&P 500 also added 0.12% to close at 5,303.27. On the other hand, the Nasdaq Composite shed 0.07%, finishing at 16,685.97.
— Lisa Kailai Han
Information technology, real estate lead S&P 500 this week
As the trading week draws to a close, the information technology and real estate sectors are on pace to lead the S&P 500's gains.
So far, information tech stocks are trading 3% higher on the week, while real estate names are 2.5% higher. The two sectors were followed by health care and communication services, respectively up 1.8% and 1.7%.
On the other hand, consumer discretionary and industrials are poised to be the only two sectors ending the week on a negative note. The two sectors are respectively currently trading 0.2% and 0.4% lower.
— Lisa Kailai Han
Where the major averages stand
Here's where the major averages stand going into market close on Friday afternoon:
- The S&P 500 is up 0.1%
- The Nasdaq Composite is down 0.1%
- The Dow Jones Industrial Average is up 0.2%
- The Russell 2000 is down 0.1%
— Lisa Kailai Han
Fewer S&P 500 companies discuss 'inflation' on earnings calls for 7th straight quarter, FactSet says
Inflation is not fading as a cause of concern at either the Federal Reserve or the public at large, but among American corporations, inflation is going quietly into that good night.
The number of S&P 500 companies mentioning inflation on their quarterly earnings calls with shareholders and analysts peaked in the first quarter (410) and second quarter (412) of 2022, just as the Fed began hiking interest rates from near zero, but since then has fallen for seven consecutive quarters, according to a study from FactSet senior earnings analyst John Butters released Friday.
Scanning conference calls transcripts from March 15 to May 17 for the use of "inflation" yielded 219 companies, FactSet said. Still, even those 219 companies is above the 10-year average of 180 companies. But while about 30 companies in the S&P 500 have yet to report first-quarter results, the total still will not exceed the fourth quarter of 2023's total of 285, FactSet said.
Management teams at only 24 companies mentioned inflation 10 or more times on their latest earnings calls, led by Darden Restaurants (23) and General Mills (21), Butters' report said. Consumer staples companies (86%) and financials (72%) mentioned inflation the most.
— Scott Schnipper
The Fed will cut rates this year upon a 'return of disinflation,' UBS says
Softer economic data in recent weeks bolsters the argument that investors may finally receive some much-anticipated rate cuts in 2024, UBS argued in a Friday note.
"We continue to believe recent economic data underpin our view that a return of disinflation should allow the Fed to start easing policy later this year," the bank wrote.
UBS added that price pressures have also been easing in recent months in categories such as shelter, which should help bring down overall inflation.
— Lisa Kailai Han
UBS becomes latest firm to say Western focus can help Boot Barn
Boot Barn continues to catch analysts' attention for its focus on a hot fashion category: Western.
UBS analyst Jay Sole, who has a buy rating, told clients the retailer's stock could run up around 25%. Part of his bullish thesis is tied to the company's focus on American Western and workwear styles, which are currently on trend.
"BOOT is the dominant retailer in two niche and underserved categories," he told clients. Additionally, Sole cited the company's expansion plans as reason to anticipate strong sales and earnings beats in the future.
Sole is not the only one taking note of the Western trend. Click the links below for more of CNBC's coverage on how Western's revival is shaking up purchasing patterns and certain stocks:
- Beyoncé bounce: Western boot sales jump more than 20% week over week since 'Cowboy Carter' launch
- Denim stocks can benefit with Western style in vogue, TD Cowen says
— Alex Harring
See the stocks moving midday
These are some of the stocks making the biggest midday moves:
GameStop — Shares tumbled 25% after the video game retailer said it plans to sell up to 45 million class A common shares in an at-the-market offering. The sale comes after GameStop shares surged earlier this week in a short-lived resurgence of the meme-stock trade.
Reddit — The social media stock popped 12% after Reddit announced a partnership with OpenAI.
Doximity — The online networking platform soared 18% on strong earnings and a share repurchase announcement.
— Alex Harring
Stocks will experience near-term choppiness followed by a late-year rally, Wells Fargo says
Stocks have rallied to record highs recently, but Wells Fargo is expecting this trend to turn on its head.
Analyst Christopher Harvey pointed out that the "bad news = good news" narrative has pushed the major stock indexes to new records. However, he believes the market is unlikely to continue pushing higher consistently, at least for now.
"Expect near-term choppiness with a late-year rally toward our SPX 5535 target," he wrote.
Harvey's year-end S&P 500 target represents a 4.5% move upward for the benchmark.
— Lisa Kailai Han
This week's biggest Nasdaq winners
Moderna and Advanced Micro Devices lead the weekly gains in the Nasdaq-100. The concentrated tech-heavy index is up more than 2% since the start of the week.
The vaccine maker rallied nearly 14%, while the chip stock is up about 9%. Other key winners include The Trade Desk and Temu owner PDD Holdings, with gains exceeding 8%. CrowdStrike, Marvell Technology and Palo Alto Networks have jumped about 7% each.
Lululemon Athletica and Paccar are the biggest laggards in the index, down 4.6% and 3.4%, respectively.
— Samantha Subin
Fed Chair Powell contracts Covid, to miss graduation speech
Federal Reserve Chair Jerome Powell has contracted Covid-19 again and will not be attending the Georgetown Law School graduation where he is scheduled to deliver the commencement address this weekend, a Fed spokesperson said.
The central bank leader "tested positive for Covid-19 late yesterday and is experiencing symptoms," the spokesperson said in a statement. "Following Centers for Disease Control and Prevention guidance, he is staying away from others and working at home."
Powell had been slated to deliver the address Sunday, but instead will do so via prerecorded video.
This is the second time Powell has contracted Covid, the first coming in January 2023.
— Jeff Cox
25 stocks in the S&P 500 hit new 52-week highs
Twenty-five stocks in the S&P 500 hit new 52-week highs during Friday's trading session.
Names that hit this milestone include:
On the other hand, Caesars Entertainment hit a 52-week low.
— Lisa Kailai Han, Christopher Hayes
Market rally broadening out beyond megacap tech stocks, strategist says
Strong economic growth combined with waning inflation should provide the perfect setup for large-cap stocks to continue rallying, according to Tom Hainlin, senior investment strategist at U.S. Bank Asset Management.
Within large-cap stocks, Hainlin believes the market rally is set to broaden beyond megacap tech names and has now included stocks from the financials, materials, industrials and energy sectors.
On the other hand, the strategist noted that small-cap stocks do not benefit from higher rates for longer like their larger counterparts do, and would not recommend aggressively pursuing the asset class.
— Lisa Kailai Han
Bank of America is optimistic on JPMorgan ahead of investor day
JPMorgan will kick off next week with an investor day that should highlight strength across the bank's business lines, according to Bank of America.
"During Monday's investor day the Street will be paying close attention to whether JPM can maintain this superior profitability (net interest margin defensibility, fee revenue growth, capital leverage, productivity gains). We believe it can," analyst Ebrahim Poonawala wrote in a note to clients.
How JPMorgan plans to spend in the coming year could be a key topic at the Investor Day, according to Poonawala. That could include deploying excess capital for acquisitions and spending money on internal projects related to artificial intelligence.
Bank of America has a buy rating on JPMorgan, with a price target of $220 per share. That is more than 8% above where the stock closed Thursday.
— Jesse Pound
Equity inflows gain steam
Inflows for U.S. equities rose $12.35 billion the past week, marking the biggest inflow in seven weeks, according to Bank of America.
Global emerging market bonds also recorded positive inflows of $0.34 billion in the period, up from negative flows of $0.73 billion, per the bank.
Meanwhile, inflows for U.S. high-grade bond funds and exchange-traded funds moderated to $10.8 billion, lower from $3.15 billion from the prior week. The firm defines "high-grade" flows as a mix of "bond" and "corporate bond" fixed income funds and ETFs domiciled in the U.S.
— Hakyung Kim
Stocks open little changed
Stocks opened little changed on Friday, a day after the Dow Jones Industrial Average crossed over the historic 40,000 level.
The 30-stock Dow added 40 points, or 0.1%, as did the S&P 500 and Nasdaq Composite.
— Lisa Kailai Han
Stocks making the biggest moves premarket
Check out the companies making headlines before the bell:
- GameStop — Shares dropped more than 20% after the video game retailer said it plans to sell 45 million common shares of its stock. It also posted preliminary results that showed a sales decline in the first quarter.
- Reddit — The social media company rallied 10.5% after announcing a partnership with OpenAI. Under the deal, Reddit will gain certain artificial intelligence features powered by OpenAI, while the ChatGPT maker will gain access to Reddit's Data application programming interface to train its AI models.
- Take-Two Interactive Software — Shares of the video game company were down more than 2% after an update about the timing of the new Grand Theft Auto game. Take-Two says the game will now come out in the fall of 2025. Previous guidance called for sometime in the 2025 year.
— Sarah Min
Oil demand is poised to grow at a rate above its historical trend in 2024, says Morgan Stanley
Even though the energy sector has mostly completely its post-Covid-19 pandemic recovery, oil demand is due to grow at a rate above its historical average, according to Morgan Stanley.
"The year 2024 is arguably the first 'normal' year in a while in which oil demand is mostly reflecting slower-moving drivers, such as economic growth, population expansion, government policies and technological change," analyst Martijn Rats wrote. "What we are finding is this: not only is oil demand continuing to grow, but it is doing so at a rate above the historical trend rate. Given the focus on 'peak oil demand' in recent years, this is actually somewhat of a surprise."
The analyst added that investments across the board in the energy sector have been rising, including in the development of new oil and gas fields and within wind and solar. Altogether, this suggests strong demand for energy current persists, regardless of its form.
— Lisa Kailai Han
Morgan Stanley stands by economic soft landing forecasts, prefers Japanese assets
An economic soft landing is still the most likely scenario to materialize, according to Morgan Stanley.
However, in a recent note, the bank's Chief Investment Officer Lisa Shalett clarified that the odds of an economic soft landing happening have gone down to 50% from 80%. The bank still expects three rate cuts this year, with the first due in September.
As for positioning, Morgan Stanley remains market weight global equities. The bank's price target for the S&P 500 this year is currently at 4,500, representing a 15% downside.
Shalett's best ideas currently lay within Japan, real assets and infrastructure investments, she wrote.
"Outside the US, we prefer Japan based on improving growth and inflation dynamics there and the very inexpensive yen. We continue to also look for stock-specific opportunities in Europe and beta opportunities in select EMs like India, Brazil, and Mexico," she added.
— Lisa Kailai Han
Take-Two Interactive falls after weak guidance, Grand Theft Auto update
Shares of video game company Take-Two Interactive were under pressure Friday morning after an update about the timing of one of its premier franchises.
Take-Two says the next Grand Theft Auto is now scheduled for the fall of 2025. Previous guidance just called for sometime during the calendar year.
Take-Two's fiscal year begins in April, so the timing has a big effect on its outlook. The company said it expects between $5.55 billion and $5.65 billion in net bookings for this fiscal year. Analysts surveyed by LSEG were expecting $6.94 billion.
The company's fiscal fourth-quarter bookings of $1.35 billion did top expectations of $1.30 billion, according to analysts surveyed by LSEG.
The stock was down more than 2% ahead of the opening bell.
— Jesse Pound
Reddit surges on OpenAI deal
Reddit surged 13% after announcing a deal with OpenAI in which the ChatGPT parent can use data from the social media platform to train its large language model.
"Including it in ChatGPT upholds our belief in a connected internet, helps people find more or what they're looking for, and helps new audiences find community on Reddit," Reddit CEO Steve Huffman said in a release Thursday.
— Fred Imbert
Country Garden's liquidation hearing in Hong Kong court adjourned
A hearing for a petition seeking the liquidation of debt-laden Chinese property firm Country Garden Holdings was adjourned by a Hong Kong court to June 11, according to Reuters.
The troubled real estate company received a liquidation petition filed by one of its creditors in late February.
It had received a "winding-up" petition dated Feb. 27 filed by Ever Credit Limited for the nonpayment of a loan worth 1.6 billion Hong Kong dollars, or $204.4 million.
Country Garden said in early April that trading in its shares on the Hong Kong Stock Exchange was suspended.
— Shreyashi Sanyal, Reuters
China's urban unemployment rate eases to 5%
China's urban unemployment rate in April eased to 5%, down from March's 5.2%.
The country's National Bureau of Statistics did not provide age-wise data. It had said earlier that age-wise data will be made available after the overall numbers were released.
NBS said in a statement that the April figures were affected by the May 1 Labor Day holiday and last year's high base.
"Major indicators of industry, exports, employment and prices improved overall, with new driving forces maintain[ing] rapid growth," NBS said.
Read the full story here.
— Evelyn Cheng
China consumption slows in April, industrial activity remains robust
China's April retail sales and fixed asset investment missed market expectations, while industrial production grew more than expected compared to the same period last year.
Retail sales rose 2.3% in April from a year earlier, the National Bureau of Statistics said. That was less than the 3.8% increase forecast in a Reuters poll, and slower than the 3.1% pace reported in March.
Industrial production rose 6.7% in April from a year ago, beating expectations for 5.5% growth, also substantially higher than 4.5% in March.
Fixed asset investment rose 4.2% for the first four months of the year, missing estimates of a 4.6% increase.
Read the full story here.
— Evelyn Cheng
Japan's central bank governor says there is 'no immediate plan' to sell ETF holdings: Reuters
Bank of Japan Governor Kazuo Ueda told parliament that the central bank has no immediate plans to sell its exchange-traded fund holdings, according to Reuters.
"We must spend some time in deciding what to do with our ETF holdings, including whether to unload them in the future," Ueda said.
In March, the BOJ dismantled its yield curve control policy and stopped its purchases of ETFs and Japanese REITs.
The BOJ has cumulative ETFs of 37.15 trillion yen, or $238.92 billion, with an estimated market value of 71.3 trillion yen, according to financial information services website QUICK's March report.
— Lim Hui Jie
Doximity pops on strong earnings and share repurchase
Doximity climbed more than 14% in extended trading after the platform for medical professionals exceeded Wall Street's earnings expectations and announced a stock repurchase.
The company came in ahead of even the most bullish analysts polled by FactSet for both adjusted earnings per share and revenue in the fiscal fourth quarter. Doximity offered slightly stronger-than-expected revenue guidance for the current quarter, coming in at $119.5 million to $120.5 million, versus consensus estimates of $118.9 million. However, its outlook for full-year performance on the measure was soft.
The San Francisco-based company also said it would buy back up to $500 million of its Class A stock.
— Alex Harring
Potential stagflation and geopolitical risks could catch investors off guard, according to Barclays
Investors are keenly aware of certain market risks, such as a potential recession and consumer stress, but may find themselves blindsided by others, according to Barclays strategist Venu Krishna.
"We think stagflation (while unlikely) has the potential to catch equity markets unaware because some traditionally defensive plays would be exactly what you don't want to own in such a scenario," the strategist wrote in a Thursday note.
Krishna added that tight risk premiums also indicate that investors have not fully priced in potential geopolitical risks.
— Lisa Kailai Han
Stocks head for winning week
Despite Thursday's retreat, the three major averages are tracking to end the week with gains.
The Nasdaq Composite has led the indexes up this week with a jump of 2.2%. The S&P 500 has added 1.4%, while the Dow has risen 0.9%.
— Alex Harring
Fed would 'like to get a couple of cuts in,' BlackRock's Rieder says
Rick Rieder, BlackRock's chief investment officer for global fixed income and head of global allocation, said on CNBC's "Closing Bell" that there are signs that the lower-end consumer in the U.S. is struggling. That could be a major factor in pushing the Federal Reserve to cut rates, Rieder said.
"It's very clear you're putting pressure on low income. I think they'd like to get a couple of cuts in this year. Could they get it in July? I'd say there's a 25% chance you could start moving in high. I think the base case is you start moving in September," Rieder said.
Those projections are roughly in line with market expectations, according to the CME FedWatch Tool.
Rieder also said he believes equities can continue to set new record highs, citing the strength of earnings and demand for stocks, including share buybacks from major tech companies.
— Jesse Pound
Stock futures are near flat
Futures tied to the Dow, S&P 500 and Nasdaq 100 were all little changed shortly after 6 p.m. ET.
— Alex Harring
