US close: Dow, S&P 500 jump after data hints at economic slowdown

US stocks rallied into the close on Friday with the Dow and S&P 500 rising strongly after economic data showed a moderation in consumer spending growth and the slowest monthly gain in prices so far this year – two factors that could increase the pressure on the Federal Reserve to start cutting interest rates.

After a tentative start as investors digested a flurry of datapoints, both the Dow and S&P 500 gained rapidly in afternoon trade, with the Dow jumping 1.5% and the S&P 500 advancing 0.8%. The Nasdaq, however, remained flat.

The Dow in particular was rebounding after a three-day skid during which it lost 2.5% of its value.

According to the US Department of Commerce, personal income rose at a monthly rate of 0.3% in April, down from 0.5% in March and in line with forecasts, but personal spending growth slowed to 0.2% from 0.7%, coming in below the 0.3% expected by the market.

Meanwhile, the monthly increase in the price deflator for personal consumption expenditures was unchanged from the previous month at 0.3%, as expected. However, at the core level, PCE price gains clocked in at just 0.2%, the slowest month-on-month gain so far this year and slightly below the 0.3% consensus forecast.

"The weaker tone of both the spending and PCE inflation data in April are the first of a series of softer reports needed for the Fed to begin cutting interest rates later this year," said Michael Pearce, deputy chief US economist at Oxford Economics.

"With four more inflation reports to go between now and the September FOMC meeting, we still think there is a good chance the Fed will cut rates at that meeting."

In other news, the Chicago business-activity index unexpectedly fell to its lowest level in four years, dropping from 37.9 to 35.4, significantly below the 40.8 predicted by economists.

Looking ahead to next week, investors' attention will be squarely on the US May non-farm payrolls report due out on Friday. Those figures may help gauge to what extent April's slowdown in hiring was more a correction attributable to various seasonal and weather-related quirks or something more enduring.

Thursday meanwhile will bring with it a reading on first quarter growth in US labour productivity and unit labour costs, both of which are key to the inflation picture and outlook for prices.

Market movers

Dell shares tanked 18% despite the tech group beating both revenue and profit forecasts with its first-quarter results after the bell on Thursday. This was the biggest single-day decline the stock has seen since 2018, with profit taking likely after the shares have more than doubled in price since the start of 2024.

Heading the other way was fashion brand Gap which soared 29% after smashing first-quarter profit forecasts, reporting earnings of 41 cents per share, compared with the 14 cents expected.

Another retailer impressing the market was department-store group Nordstrom, which gained 5% after delivering a 5.1% increase in first-quarter net sales, with its budget chain Nordstrom Rack seeing a 13.8% jump in sales.

Elsewhere in the fashion-retail space, conglomerate VF Corporation jumped 8% after appointing the chief product officer at Lululemon as Vans's new brand president.

Dow Jones - Risers

Salesforce.Com Inc. (CRM) $234.44 7.54%
Walgreens Boots Alliance, Inc. (WBA) $16.22 5.39%
Unitedhealth Group Inc. (UNH) $495.37 2.85%
Boeing Co. (BA) $177.61 2.81%
McDonald's Corp. (MCD) $258.89 2.71%
Chevron Corp. (CVX) $162.30 2.55%
Intel Corp. (INTC) $30.85 2.19%
Walt Disney Co. (DIS) $103.91 2.17%
Verizon Communications Inc. (VZ) $41.15 2.03%
3M Co. (MMM) $100.14 1.98%

Dow Jones - Fallers

Caterpillar Inc. (CAT) $338.52 -0.22%
Dowdupont Inc. (DWDP) $0.00 0.00%
Microsoft Corp. (MSFT) $415.13 0.11%
Dow Chemical Co. (DOW) $57.63 0.42%
Visa Inc. (V) $272.46 0.43%
Apple Inc. (AAPL) $192.25 0.50%
International Business Machines Corporation (CDI) (IBM) $166.85 0.74%
Merck & Co. Inc. (MRK) $125.54 0.81%
Cisco Systems Inc. (CSCO) $46.50 0.82%
Johnson & Johnson (JNJ) $146.67 0.96%

S&P 500 - Risers

Gap Inc. (GPS) $28.96 28.60%
VF Corp. (VFC) $13.28 7.70%
Salesforce.Com Inc. (CRM) $234.44 7.54%
Foot Locker Inc. (FL) $27.73 7.11%
Dollar General Corp (DG) $136.91 7.01%
Kohls Corp. (KSS) $22.39 6.52%
CVS Health Corp (CVS) $59.60 6.35%
Elevance Health Inc. (ELV) $538.48 6.14%
Advance Auto Parts (AAP) $70.64 5.50%
Walgreens Boots Alliance, Inc. (WBA) $16.22 5.39%

S&P 500 - Fallers

HP Inc (HPQ) $36.50 -4.85%
Hewlett Packard Enterprise (HPE) $17.65 -4.70%
NRG Energy Inc. (NRG) $81.00 -4.30%
Broadcom Inc. (AVGO) $1,328.55 -2.60%
Arista Networks Inc. (ANET) $297.65 -1.98%
Lam Research Corp. (LRCX) $932.44 -1.92%
Amazon.Com Inc. (AMZN) $176.44 -1.61%
IQVIA Holdings Inc. (IQV) $219.09 -1.51%
KLA-Tencor Corp. (KLAC) $758.51 -1.51%
Resmed Inc. (RMD) $206.33 -1.44%

Nasdaq 100 - Risers

Walgreens Boots Alliance, Inc. (WBA) $16.22 5.39%
Charter Communications Inc. (CHTR) $287.12 3.99%
Liberty Global plc Series A (LBTYA) $16.67 3.22%
Illumina Inc. (ILMN) $104.28 3.20%
Expedia Group Inc. (EXPE) $112.86 3.09%
Comcast Corp. (CMCSA) $40.03 2.98%
Sirius XM Holdings Inc (SIRI) $2.82 2.92%
Liberty Global plc Series C (LBTYK) $17.07 2.83%
Vertex Pharmaceuticals Inc. (VRTX) $455.34 2.77%
Dollar Tree Inc (DLTR) $117.95 2.75%

Nasdaq 100 - Fallers

Broadcom Inc. (AVGO) $1,328.55 -2.60%
JD.com, Inc. (JD) $29.62 -1.95%
Lam Research Corp. (LRCX) $932.44 -1.92%
NetEase Inc. Ads (NTES) $89.03 -1.80%
Baidu Inc. (BIDU) $97.20 -1.73%
Amazon.Com Inc. (AMZN) $176.44 -1.61%
KLA-Tencor Corp. (KLAC) $758.51 -1.51%
Micron Technology Inc. (MU) $125.00 -1.02%
Netflix Inc. (NFLX) $641.62 -0.93%
Hasbro Inc (HAS) $59.78 -0.86%