U.S. stocks and bonds rallied Friday, with the S&P 500 Index reaching a new intraday high, as U.S. inflation data came in short of Federal Reserve expectations, spotlighting concerns of some central bankers about additional interest rate hikes. Treasuries headed for their first weekly gain in three, bolstered by Fed Chair Janet Yellen’s gradualist tone to policy tightening as inflation languishes below the central bank’s 2 percent target. Bunds rose for the first day in four. Oil and gold advanced.
A gauge of the dollar fell for the fifth day, its longest streak of losses in two months. S&P 500 index futures were little changed after financial shares led gains yesterday. JPMorgan Chase & Co. and Citigroup reported quarterly earnings that were largely in line with expectations, although fixed-income revenue was hurt by low volatility.
The pace of recent inflation in the world’s largest economy has become even more pertinent after Yellen hinted in a congressional testimony this week that sluggish price rises have structural causes. The soft June consumer price index number continues more than a quarter of poor progress at a time when some Fed officials are hinging their support for further rate rises on the inflation outlook in this figure.
Retail sales also unexpectedly dropped for a second month in June, signaling consumers are providing only modest support for the U.S. economy and suggesting a weaker than hoped for rebound in GDP in the second quarter. Major financial firms JPMorgan Chase & Co. and Citigroup Inc. reported earnings. JPMorgan, the biggest U.S. bank, posted the highest annual profits ever for a bank over the past 12 months. And Citigroup topped earnings estimates, powered by strength in its investment banking group.
Here are the main moves in markets:
The S&P 500 was up 0.3 percent to a record 2,455.10 at 12:45 p.m. in New York. The Dow Jones Industrial Average gained 0.2 percent to 21,595.41, adding to Thursday’s record close. The Nasdaq 100 rose 0.6 percent. The Stoxx Europe 600 was up 0.2 percent for a weekly gain of 1.8 percent.
Currencies and Bonds
The Bloomberg Dollar Spot Index was down 0.6 percent, near its lowest since September. The pound added 1.1 percent to $1.3081, and the euro gained 0.5 percent to $1.1452. Benchmark 10-year U.S. Treasury yields fell three basis point to 2.32 percent, while sovereign yields across Europe also declined with the benchmark bund yield dropping one basis point and French peers two basis points lower.
West Texas Intermediate crude rose 1.1 percent to $46.57 a barrel for a weekly advance of more than 5 percent. Gold was up 1 percent at $1,228.65 an ounce. Zinc is on track to snap three weeks of gains after inventories available to investors on the London Metal Exchange surged by the most on record.