US Stocks Climb on Friday as Inflation Expectations Seen Easing, Bullard Plays Down Recession Fears

Last Updated: Friday, June 24, 2022 4:55 PM | MT Newswires

US equity benchmarks closed higher Friday as an inflation expectations gauge showed signs of easing versus a prior estimate while St. Louis Federal Reserve Bank President James Bullard played down the possibility of a recession.

The Dow Jones Industrial Average climbed 2.7% to 31,500.68, with the S&P 500 up 3.1% to 3,911.77 and the Nasdaq Composite was 3.3% higher at 11,607.62. For the week, the three major indexes logged gains, with the Dow rising 5.4%, the S&P 500 climbing 6.5% and the Nasdaq ending 7.5% higher.

All sectors were in the green, led by materials.

The US 10-year yield rose 6.6 basis points to 3.14% after touching 3.49% last week.

West Texas Intermediate crude oil futures climbed 3.2% to $107.58 per barrel but were still well below more than $120 per barrel reached earlier this month.

The University of Michigan consumer sentiment index was revised down Friday to a record low of 50 for June from 50.2 in the preliminary estimate, compared with forecasts for no revision in a survey compiled by Bloomberg. The index was at 58.4 in May.

The year-ahead inflation expectations eased to 5.3% in June from a preliminary reading of 5.4%.

"We see a relief rally" led by cyclical growth -- mostly technology -- to 4,150 for the S&P 500 in summer "as oil prices fall and the market looks ahead to a possible Fed rate pause" at its December meeting, a research note from Stifel said Friday.

The process of bringing down inflation could be "painful" but the Federal Open Market Committee must continue to lift the federal funds rate to prevent inflation expectations from becoming further entrenched, Bullard said Friday. Bullard said he would like to see the federal funds rate closer to 3.5% by the end of 2022. With the range currently at 1.5% to 1.75%, that would require a further 175 to 200 basis points of total tightening during the last four meetings this year. He also played down the possibility of a recession.

The biggest gainer on the Dow was Salesforce (CRM), with shares up 7.4%.

Among the top gainers on the S&P 500 was Carnival (CCL), which reported a narrower fiscal Q2 net loss versus a year ago as sales jumped. Shares of the cruise liner jumped 12.4%. Other cruise stocks dominated the S&P 500 with Royal Caribbean Group (RCL) up 15.8% and Norwegian Cruise Line Holdings (NCLH) up 15.4%.

In other corporate news, Meta Platforms (META) along with companies such as Disney (DIS), Netflix (NFLX), Paramount Global (PARA), Comcast (CMCSA), Sony Group Corp. (SONY) and Dick's Sporting Goods (DKS) will shoulder abortion-related travel costs for their employees following the Supreme Court's decision overturning the landmark 1973 ruling in Roe v. Wade, media outlets reported Friday.

Gold slipped 0.1% to $1,827.60 per troy ounce while silver was up 0.5% to $21.14 per ounce. Among energy ETFs, the United States Oil Fund rose 2.9% to $81.27, and the United States Natural Gas Fund fell 0.2% to $21.29.

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