The Dow Jones Industrial Average continued its impressive record-setting performance on Friday as markets closely scrutinized the Federal Reserve's preferred inflation index. The index rose by 0.6%, landing at a close of 41,563.1, while the Nasdaq Composite experienced a more robust gain of 1.1%, reaching 17,713.6.
The S&P 500 also saw a positive closing, advancing 1% to 5,648.4. All market sectors registered gains, with the consumer discretionary sector leading the charge with a remarkable 1.9% increase. For the month of August, the S&P 500 reflected strong performance with a commendable rise of 2.3%, while the Dow followed closely with a 1.8% increase.
The Nasdaq managed to gain 0.6%. Importantly, U.S. markets will observe a closure on Monday in observance of Labor Day. Shifting to economic indicators, U.S. consumer spending data exhibited growth in July, satisfying market forecasts. Simultaneously, the Federal Reserve's preferred inflation measure held unexpectedly steady on an annual basis, as reported by government statistics.
BMO indicated in a communication to clients: "This personal income and spending report was just what the Fed needed to see to further its confidence to start reducing interest rates. Tame headline and core price readings along with a slowdown in real disposable income growth should help maintain inflation and consumer spending in check, even as the Fed embarks on a course to reduce its monetary restrictions." Consumer sentiment in the U.S.
showed promising improvement in August, marking the first rise in five months, while inflation expectations for the year ahead continued to decline, as per the final results from the University of Michigan's Surveys of Consumers. In the bond market, the yield on the U.S. 10-year note rose 3.6 basis points to settle at 3.90%, whereas the two-year yield increased by 2.1 basis points to reach 3.91%. In terms of company performance, Intel ($INTC) saw its shares surge by an impressive 9.5%, marking it as the top gainer on both the S&P 500 and the Dow, and the second-best performer on the Nasdaq.
This substantial rise is attributed to the company’s collaboration with investment banking giants Morgan Stanley and Goldman Sachs to explore various strategic options amidst ongoing challenges, according to a report from Bloomberg News. In a separate announcement, Intel and International Business Machines ($IBM) revealed on Thursday that they have entered into a partnership to deploy Intel's Gaudi 3 artificial intelligence accelerators on the IBM Cloud platform.
Consequently, IBM’s shares closed 1.6% higher on Friday. MongoDB ($MDB) emerged as the brightest performer on the Nasdaq, climbing 18%. The surge in stock price followed the company’s announcement on Thursday regarding an enhanced full-year outlook, prompted by better-than-anticipated fiscal Q2 results and improving consumption trends, as highlighted by RBC Capital Markets in their note to clients. Conversely, shares of Ulta Beauty ($ULTA) experienced a 4% decline, the sharpest fall within the S&P 500.
The beauty retailer released a disappointing fiscal Q2 report, revealing earnings and comparable sales that fell short of market expectations, alongside a downgrade of its guidance. Experts at Evercore ISI predicted that such outcomes will exert downward pressure on the company’s share price in the short term. Overall, the quarterly per-share earnings for S&P 500 companies have demonstrated an average growth of nearly 12% year-over-year, with 74% of companies exceeding Wall Street forecasts as the latest earnings season approaches its conclusion, according to UBS Securities. On the commodities front, West Texas Intermediate crude oil prices dropped by 3%, settling at $73.62 per barrel.
Gold prices also fell 1%, closing at $2,535.20 per troy ounce, while silver faced a more significant setback, down 2.5% to $29.25 per ounce..