US close: Stocks jump as some investors dial back expectations for Fed tightening
Stocks jumped higher at the end of the week after what some observers described as a less hawkish than expected semi-annual policy report to Congress from the US central bank.
Critically, the tone of that report appeared to chime with the policy bias set out by New York Fed chief William Dudley in a speech on 11 February.
According to Bloomberg, on that occasion Dudley had indicated: "A small and transitory overshoot of 2% inflation would not be a problem.
"Were it to occur, it would demonstrate that our inflation target is symmetric, and it would help keep inflation expectations well-anchored around our longer-run objective."
Against that backdrop, the Dow Jones Industrial Average added 1.39% or 347.51 points to end the session at 25,309.99, alongside a rise of 43.34 points or 1.60% to 2,747.30 on the S&P 500 and an advance of 127.31 points or 1.77% to 7,337.39 in the Nasdaq Composite.
In parallel, the yield on the benchmark 10-year US Treasury note gave back five basis points to close at 2.87%.
Commenting on Friday's price action, Michael Hewson at CMC Markets UK said: "Having spent most of last week in negative territory US markets managed to close higher for the second week in succession, as well as at a three week high, but it was only as a result of strong one day gain that also coincided with a sharp two day decline in US yields which saw the US 10 year drop from 2.95% at the Wednesday close, to finish the week 8.4 basis points lower at 2.8660.
"[...] The decline in US yields does appear to have only been at the long end with the 10/2’s spread narrowing sharply from just below 0.8% two weeks ago to just above 0.6%, which would suggest that markets still remain in two minds, despite last weeks Fed minutes, as to whether we’ll see four US rate rises this year, or somewhat less than that."
Linked to the above, in an interview with Bloomberg on Thursday, US Treasury Secretary Steven Mnuchin dismissed concerns about rising wages, saying they won't necessarily prompt a rise in inflation.
"There are a lot of ways to have the economy grow...You can have wage inflation and not necessarily have inflation concerns in general," he said.
On the corporate front, US food company General Mills made a move into the pet food market as it agreed to buy Blue Buffalo for $40 per share in cash, which is around $8bn. Blue Buffalo shares surged 17.23%, while General Mills fell off 3.59%.
Chemical company Albermarle moved ahead 4.46% after it hiked its quarterly dividend by 5% to 33.50 cents a share.
Hewlett-Packard shares jumped 3.46% after the tech group reported a strong first quarter that beat earnings expectations and raised its full-year projections.
Xcerra edged higher by 0.10% after the semiconductors and electronics testing firm announced it would terminate its sale to a Chinese group, citing difficulties receiving federal approval was too much for the $580m deal.
Dow Jones - Risers
Intel Corp. (INTC) $47.73 4.21%
Microsoft Corp. (MSFT) $94.06 2.54%
Cisco Systems Inc. (CSCO) $44.00 2.47%
Chevron Corp. (CVX) $112.59 2.46%
Caterpillar Inc. (CAT) $162.41 2.23%
Exxon Mobil Corp. (XOM) $77.53 2.20%
Visa Inc. (V) $122.91 2.12%
Goldman Sachs Group Inc. (GS) $266.77 2.04%
JP Morgan Chase & Co. (JPM) $117.31 2.03%
Walt Disney Co. (DIS) $107.25 1.91%
Dow Jones - Fallers
General Electric Co. (GE) $14.50 -0.89%
United Technologies Corp. (UTX) $133.15 -0.32%
Walmart Inc. (WMT) $92.89 0.13%
Boeing Co. (BA) $356.66 0.21%
Procter & Gamble Co. (PG) $81.07 0.26%
3M Co. (MMM) $237.02 0.43%
Merck & Co. Inc. (MRK) $54.88 0.55%
Verizon Communications Inc. (VZ) $48.29 0.88%
Coca-Cola Co. (KO) $44.05 1.19%
Unitedhealth Group Inc. (UNH) $230.16 1.35%
S&P 500 - Risers
Frontier Communications Co. (FTR) $9.10 12.90%
Hewlett Packard Enterprise (HPE) $18.13 10.54%
Nordstrom Inc. (JWN) $53.56 6.54%
Advance Auto Parts (AAP) $116.32 5.28%
Vertex Pharmaceuticals Inc. (VRTX) $165.90 5.27%
Micron Technology Inc. (MU) $46.53 5.15%
Newfield Exploration Co (NFX) $24.66 5.12%
Diamond Offshore Drilling Inc. (DO) $15.35 5.07%
Urban Outfitters Inc. (URBN) $37.05 4.72%
Mosaic Company (MOS) $28.74 4.70%
S&P 500 - Fallers
First Solar Inc. (FSLR) $61.79 -6.77%
General Mills Inc. (GIS) $52.99 -3.59%
Alcoa Corporation (AA) $46.70 -2.73%
SCANA Corp. (SCG) $39.30 -1.60%
Hormel Foods Corp. (HRL) $32.64 -1.09%
Stericycle Inc. (SRCL) $60.05 -0.96%
Hanesbrands Inc. (HBI) $19.94 -0.94%
General Electric Co. (GE) $14.50 -0.89%
Quanta Services Inc. (PWR) $35.67 -0.64%
Textron Inc. (TXT) $59.31 -0.40%
Nasdaq 100 - Risers
Vertex Pharmaceuticals Inc. (VRTX) $165.90 5.27%
Micron Technology Inc. (MU) $46.53 5.15%
Mercadolibre Inc. (MELI) $387.26 4.81%
Western Digital Corp. (WDC) $89.14 4.22%
Intel Corp. (INTC) $47.73 4.21%
Alexion Pharmaceuticals Inc. (ALXN) $118.93 3.79%
Seagate Technology Plc (STX) $53.29 3.76%
Activision Blizzard Inc. (ATVI) $72.07 3.71%
Adobe Systems Inc. (ADBE) $209.74 3.52%
Illumina Inc. (ILMN) $233.84 3.13%
Nasdaq 100 - Fallers
Biomarin Pharmaceutical Inc. (BMRN) $83.05 -1.13%
Dollar Tree Inc (DLTR) $106.61 -0.36%
Intuit Inc. (INTU) $171.78 -0.19%
Henry Schein Inc. (HSIC) $68.05 0.12%
Hasbro Inc (HAS) $97.47 0.16%
Mylan Inc. (MYL) $41.45 0.41%
Ross Stores Inc. (ROST) $78.87 0.47%
Mondelez International Inc. (MDLZ) $43.75 0.55%
Baidu Inc. (BIDU) $250.74 0.56%
Hologic Inc. (HOLX) $39.21 0.69%