The S&P 500 (^GSPC +0.58%) rose 0.58% to 7,563.63, the Nasdaq Composite (^IXIC +0.91%) gained 0.91% to 26,917.47 as stocks reversed early losses to close near record highs despite hotter PCE inflation. The Dow Jones Industrial Average (^DJI +0.05%) inched up 0.05% to 50,668.97.
Market movers
Snowflake jumped 36% after strong Q1 results and a $6 billion Amazon deal, while Microsoft climbed on analyst optimism and plans to build in‑house AI models. In contrast, Salesforce dipped despite yesterday’s solid earnings on concern over heavy AI spending. Photronics plunged on weak results and outlook.
What this means for investors
Today’s April Personal Consumption Expenditures (PCE) index showed prices rose 3.8% year-on-year, as soaring energy costs impact living costs. Concern about sticky inflation will make it difficult for the Federal Reserve to cut interest rates, and markets now expect them to remain unchanged for the remainder of the year. Indeed, some economists predict rates will increase before they fall.
The inflation data did not stop major indexes from pushing upwards, as news of a possible 60-day truce agreement between the U.S. and Iran buoyed stocks once again. Markets reached new highs amid falling oil prices and strong earnings as geopolitical headlines continue to drive volatility. WTI crude oil fell to below $90 a barrel, its lowest point in almost six weeks.
Investors hoping for a relief rally once the Strait of Hormuz reopens might be disappointed. Sure, normalizing oil supplies would lower Treasury yields and reduce oil prices. However, the conflict has not stopped the recent stock rally, suggesting that markets are already looking beyond the war.
Emma Newbery has positions in Amazon and Snowflake. The Motley Fool has positions in and recommends Amazon, Microsoft, Salesforce, and Snowflake. The Motley Fool has a disclosure policy.