Wall Street continued its upward trajectory on Friday. The primary stock indexes furthered their recent string of victories, marking a robust month of gains. The S&P 500 gained 0.2%, achieving its seventh consecutive rise and ninth weekly win, the longest since 2023. The index also set an all-time high for the fourth consecutive day.
The Dow Jones Industrial Average increased by 0.7%, and the Nasdaq composite rose 0.2%. Both the Dow and Nasdaq reached new records, having hit highs earlier in the week.
Technology Stocks Lead Gains
Big technology stocks significantly contributed to the market’s record levels. Their high valuations wield substantial influence over the market’s direction. During May, technology stocks in the S&P 500 surged over 15%, while other sectors mostly diminished in value.
“The rally has been largely tech-led and supported by resilient earnings, but the key question is whether it can be sustained,” stated Angelo Kourkafas, senior global strategist at Edward Jones, in a research note.
On Friday, tech stocks continued to drive the market higher. Microsoft saw a 5.4% increase, and Broadcom gained 4.7%. Dell Technologies led the S&P 500 with a 32.8% surge after exceeding profit expectations and raising its forecast due to robust demand for AI computing.
Some sectors in the S&P 500 recorded losses. Paramount Skydance dropped 1.9%, Amazon.com fell 1.2%, and Costco Wholesale decreased 3.9%.
Global Economic Concerns
Wall Street has been advancing despite concerns about rising U.S.-Iran tensions worsening inflation and threatening economic growth. The U.S. and Iran are reportedly negotiating to extend a ceasefire, reducing pressure on oil prices. Brent crude for August delivery fell 1.7% to $91.12 per barrel, still above the pre-war level of $70. U.S. crude for July delivery also dropped 1.7% to $87.36 per barrel.
Treasury yields remained steady alongside falling oil prices. The yield on the 10-year Treasury slipped slightly to 4.44% from 4.45% the previous day. High oil prices remain a significant concern for Wall Street, given that around 20% of global oil and gas passes through the Strait of Hormuz. This situation has driven up prices for gasoline and various goods, exacerbating inflation and impacting consumers and businesses. Prices were rising even before the conflict, due to ongoing tariff effects.
Inflation and Corporate Profits
Recent reports have highlighted inflation’s impact on consumers. A preferred Federal Reserve inflation measure reached its highest level in three years during April. Consumer confidence has been declining amid inflationary pressures.
However, recent corporate earnings have somewhat alleviated Wall Street’s inflation concerns. Companies in the S&P 500 reported an overall profit growth of 28% for the most recent quarter, according to FactSet. With most companies having disclosed their results, investor attention may shift back to inflation, consumer behavior, and the Federal Reserve’s upcoming interest rate decisions.
The Federal Reserve has maintained its benchmark interest rate while closely monitoring inflation. It is expected to hold rates steady throughout the year, based on CME’s FedWatch tool. Lowering interest rates could reduce borrowing costs and stimulate the economy, but might exacerbate inflation when prices are currently high.
Market Performance
Despite market volatility caused by Middle Eastern conflict, stock gains continued in May. The S&P 500 finished the month with a 5.1% gain and is up 10.7% year-to-date.
On Friday, the S&P 500 rose by 16.43 points to 7,580.06. The Dow increased by 363.49 points to 51,032.46, while the Nasdaq added 55.15 points, ending at 26,972.62. European and Asian markets mostly showed positive movement as well.