Wall Street closed out the month of May on a high note as stocks rallied on Friday, fueled by a report showing that inflation is not worsening. The S&P 500 rose 0.8%, marking its sixth winning month in the last seven. The Dow Jones Industrial Average surged nearly 575 points, or 1.5%, while the Nasdaq composite slipped slightly.
One of the standout performers of the day was Gap, which saw its stock soar by 28.6% after reporting stronger profit and revenue for the latest quarter than analysts had expected. The parent company of Old Navy and Banana Republic also raised its forecasts for sales and profitability for the year, despite acknowledging the uncertain economic outlook.
The positive momentum in the stock market was supported by easing Treasury yields in the bond market following the inflation report, which showed that key measures of inflation remained in line with expectations. This has raised hopes that the Federal Reserve may consider cutting interest rates in the future.
However, the report also revealed that consumer spending growth had weakened more than expected, signaling a potential shift in consumer behavior. Businesses may need to adjust to a more cautious consumer environment in the coming months.
Tech stocks experienced mixed fortunes, with Dell tumbling despite meeting profit forecasts, and Nvidia seeing a slight decline after a period of strong growth. Trump Media & Technology Group also faced challenges, with its stock dropping following the conviction of Donald Trump on felony charges.
Overall, the S&P 500 closed at 5,277.51, the Dow Jones at 38,686.32, and the Nasdaq at 16,735.02. Stock markets in Asia and Europe showed mixed results.
Investors are now looking ahead to the next Federal Reserve meeting, with expectations of a potential interest rate cut later in the year. The market remains cautiously optimistic as it navigates through changing economic conditions and evolving consumer trends.
