In an encouraging turn of events, US equity indexes experienced a notable rise during midday trading on Friday, buoyed by a matching inflation measure that aligned with market expectations. The Nasdaq Composite saw an increase of 0.5%, reaching a level of 18,635.1. At the same time, the S&P 500 mirrored this trajectory with an uptick of 0.5%, climbing to 5,887.5.
The Dow Jones Industrial Average also enjoyed a boost, advancing by 0.5% to 43,469.8. Initially, both the Nasdaq and the S&P 500 faced slight declines at the beginning of the trading session, but recovered as the day progressed. Leading the gainers were sectors such as consumer discretionary and industrials, while healthcare stood out as the sole sector in decline for the day. The bond market reflected a similar sentiment with US Treasury yields falling intraday.
Specifically, the 2-year yield dipped by 3.6 basis points to settle at 4.04%, while the 10-year yield experienced a decline of 3.7 basis points, landing at 4.25%. Turning to economic indicators, the personal consumption expenditures (PCE) price index registered a month-over-month increase of 0.3%, aligning perfectly with forecasts.
This adjustment slowed the year-over-year rate of inflation to 2.5%, down from the prior month’s 2.6%. Importantly, this rate matched the 0.3% growth that was recorded in December, as reported by the Bureau of Economic Analysis. Moreover, the core PCE price index exhibited a similar pattern, increasing by 0.3% in line with expectations, following a 0.2% gain noted in December.
Year-over-year, this index’s rate slowed to 2.6%, compared to a previous rate of 2.9% from the month before. In the realm of corporate performance, shares of AES Corporation soared by an impressive 14% in intraday trading, marking it as the top performer on the S&P 500. This surge followed the company’s report of Q4 adjusted earnings that surpassed expectations, alongside a fuller-year 2025 guidance that exceeded the average analyst estimates compiled by FactSet. On the flip side, NetApp emerged as the worst performer on the index, with shares plummeting by 16% intraday.
This downturn followed the company’s fiscal Q3 results that fell unexpectedly short, leaving revenue stagnant at the low end of guidance. The firm’s anticipated recovery in Q4 was characterized as ‘muted’ by Wedbush Securities in their review of the company’s earnings, leading to unfavorable market reactions. In a more positive light, Monster Beverage experienced a significant jump, climbing 5.8% following an announcement of Q4 sales that exceeded expectations late Thursday. Meanwhile, commodity markets reflected variances as West Texas Intermediate crude oil futures dropped by 1.4% to settle at $69.36 a barrel.
This price adjustment underscores the ongoing fluctuations in the energy sector, an important observation for investors watching commodity-related investments closely..