Published: Friday, May 10, 2020
NEW YORK – U.S. stock markets closed out another successful week on Friday.
After a largely miserable April, the S&P 500 gained 8.60 points or 0.2% to 5,222.68, completing a third consecutive week of gains. The S&P 500 was on track for a larger gain in the morning but this disappeared after a disappointing report on U.S. Consumer Sentiment.
The Dow Jones Industrial Average rose 125.08 or 0.3% to 39,512.84 and the Nasdaq Composite fell by 5.40 or less than 0.1% to 16,340.87.
S&P 500 is now within 0.6% from its previous record, thanks to renewed hopes that Federal Reserve will cut interest rates in this year. A flood of stronger-than-expected reports on profits from big U.S. companies has also helped support the market.
Gen Digital’s stock jumped by 15.3% following the announcement of a better-than-expected profit for the first quarter of 2024. Cyber safety company LifeLock and Norton, which are brands of the cyber security company, has also authorized a $3 billion stock buyback program. The company joined an increasing number of companies that have announced large-scale programs to boost earnings per share for investors.
Novavax’s stock nearly doubled, and shot up 98.7% after an announcement of a deal that could be worth over $1.2 billion. The agreement includes the right to co-commercialize Novavax’s COVID-19 vaccination worldwide with certain exceptions. Novavax reported a smaller loss than analysts had expected for its latest quarter.
These helped to offset an 11% drop in revenue for Akamai Technologies. The company exceeded analysts’ expectations on profit, but missed them on revenue. Cloud computing, security and content-delivery company Akamai Technologies also provided financial forecasts that fell short analysts’ expectations for the coming year.
The company said that the rising value of the U.S. Dollar against other currencies, as well as the slowing growth in traffic across the industry, is hurting its business. This helped to overshadow the company’s own announcement about a plan to buy up to $2 billion worth of stock.
Treasury yields increased on the bond market following a dismal preliminary report by the University of Michigan.
Joanne Hsu is the director of the Consumer Survey. She said that the results showed that the sentiment of U.S. consumers has declined by more than economists had expected. The drop was “statistically important” and brought the sentiment down to its lowest level in six months.
Even more depressing is the fact that U.S. consumer’s forecasted inflation of 3.5% for the next year. This was up from 3.2% forecasted a month ago. The fear is that if such expectations spiral upwards, it could create a vicious circle that worsens the inflation.
This article highlights the increasing struggle of some companies’ customers, especially those with lower incomes.
The yield for the 10-year Treasury increased to 4.50% on Thursday from 4.46%. The movement was modest, compared to the drop from 4.70% at the end of last month.
Bank of America’s rates strategists believe that the markets may be on hold until they receive Wednesday’s much-anticipated update on U.S. consumer inflation. CME Group data shows that traders are still mostly penciling in at least one or two interest rate cuts by the Federal Reserve for this year.
According to Brian Jacobsen of Annex Wealth Management, “Right Now, the Market is in a Good Mood thanks to a Decent Earnings Season and a Fed with a High Bar to Hike,” “That mood could change quickly.”
Jerome Powell, the Federal Reserve chair, helped lower yields last week after saying that the central bank is closer to cutting than raising its main interest rate, despite a series of stubbornly high inflation readings this year. The Fed keeps its main interest rates at their highest levels in over two decades to try and bring high inflation under control.
The U.S. economy may be able to balance the delicate act of being strong enough to avoid a recession, but not too strong so as it increases inflation.
London’s FTSE 100 grew 0.6% on foreign stock exchanges after the U.K. government announced that the economy had recovered to growth in the first quarter of this year. It was a better performance than expected and ended two consecutive quarters of economic contraction.
Tokyo’s Nikkei rose by 0.4% in Japan after a report revealed that strong auto exports helped reduce the nation’s deficit. It also showed solid returns from overseas investments.
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Yuri Kageyama, Matt Ott and AP Business Writers contributed.
Source: ABC News