Stock Market News Today: Markets hover near record highs as post-CPI rally stalls (SP500)

U.S. stocks on Friday were largely flat, as a rally sparked by the latest consumer inflation report earlier this week continued to stall. Nevertheless, it has been a record-breaking past few days for the markets, and the S&P 500 (SP500) is on track for a four-week win streak.

The attention now turns to Nvidia’s (NVDA) quarterly results next week. The chip giant has become the leading firm in the artificial intelligence (AI) race, and its report will be a barometer for the AI craze.

The S&P (SP500) was last up 0.01% to 5,297.70 points in mid-day trade. Two days earlier, Wall Street’s benchmark gauge took out the 5,300 points level for the first time ever. The tech-heavy Nasdaq Composite (COMP:IND) was flat at 16,697.02 points, after having scaled an all-time intraday peak of 16,797.83 in the previous session.

The blue-chip Dow (DJI) gained 0.10% to 39,909.86 points. On Thursday, the venerable gauge briefly surpassed the 40,000 points mark in a historic first, then retreated to end marginally lower.

Of the 11 S&P sectors, seven were in the green.

For the week so far, the S&P (SP500) was +1.44%, the Nasdaq (COMP:IND) was +2.18%, and the Dow (DJI) was +1.00%.

The producer price index (PPI) and consumer price index (CPI) reports for April on Monday and Tuesday, respectively, have painted a somewhat mixed picture on inflation, but market participants have focused on the positives. March readings in the PPI report were revised lower, which offset hotter-than-expected figures for April. Meanwhile, headline CPI came in a shade lower, while core CPI cooled for the first time since October 2023.

Traders reacted to the inflation data by strengthening their bets for interest rate cuts by the Fed. Also adding to the positive sentiment has been a largely strong earnings season so far, with Walmart (WMT) scaling a record high just yesterday after its quarterly report. With more than 400 companies having reported Q1 results, nearly 80% have beat estimates by an average of greater than 8%. Moreover, the percentage of companies raising their guidance this season were slightly higher than those that lowered their outlook.

Friday’s economic calendar was fairly light. Shortly after the start of regular trading, the U.S. Census Bureau released its quarterly retail e-commerce sales report. The headline number increased 2.1% in Q1 from Q4 2023. Meanwhile, total retail sales for Q1 fell 0.1% from Q4. Following on from monthly retail sales data earlier this week, the numbers continued to suggest muted consumer spending.

At the same time, the Conference Board’s U.S. leading economic index (LEI) fell for a second straight month in April. The index has long been seen as a recession bellwether, however its divergence over the last two years or so from an economy that is clearly robust had called that status into question.

“(The LEI) remains out of sync with an economy that continues to expand. The index is in a hole, now just a stone’s throw away from its pandemic low,” Wells Fargo’s Tim Quinlan said.

“The index is now only 1.3 percentage points above its pandemic-related trough hit exactly four years ago. The U.S. economy has evolved in many unexpected ways since then, and despite a generally strong macroeconomic backdrop, recession indicators are still flashing signs of weakness. While the upturn in the six-month annualized change in the LEI is historically consistent with an improving economy, it is emerging from a recession signal that did not come to fruition,” Quinlan added.

Turning to the fixed-income markets, U.S. Treasury yields were higher on Friday. The longer-end 30-year yield (US30Y) was up 4 basis points to 4.55%, while the 10-year yield (US10Y) was up 5 basis points to 4.41%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up 1 basis point to 4.82%.

See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.