Wall Street closed out a successful month of May with a surge on Friday, as stocks rallied following a report that showed inflation was not worsening as feared. The S&P 500 rose by 0.8%, marking its sixth winning month out of the last seven. The Dow Jones Industrial Average saw a jump of nearly 575 points, or 1.5%. On the other hand, the Nasdaq Composite Index fell slightly by less than 0.1%.
One of the standout performers of the day was Gap, which soared by 28.6% after exceeding analysts’ expectations for profits and revenue in the last quarter. The retailer also raised its sales and profitability forecasts for the year, despite acknowledging the uncertain economic outlook.
Overall, falling Treasury yields in the bond market supported the stock market rally, with the latest inflation data coming in line with expectations. This has raised optimism that the Federal Reserve may not need to raise interest rates anytime soon, given that inflation seems to be moving towards its 2% target sustainably.
However, the report also showed weaker growth in consumer spending and income, indicating a need for businesses to adapt to a more cautious consumer environment. This led to a decline in the two-year Treasury yield, signaling expectations of potential Fed action in the future.
Despite the positive sentiment on Wall Street, some technology stocks experienced losses. Dell, for instance, dropped by 17.9%, while Nvidia saw a second consecutive day of decline. On top of that, Trump Media & Technology Group fell by 5.3% following former President Donald Trump’s felony conviction.
In summary, while the stock market ended May on a high note, concerns remain regarding the balance between economic growth and inflation. The Federal Reserve’s next moves will be crucial in navigating these uncertain waters, as investors keep a close eye on future interest rate decisions and their impact on the market.
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