The New York Stock Exchange finished higher on Friday, less anxious about an economic slowdown and sensitive to the prospect of a possible deceleration in inflation, which could boost stocks between now and earnings season.
The Dow Jones rose 2.68 percent to 31,500.68 points, the Nasdaq index rose 3.34 percent to 11,607.62 points and the broader S&P 500 index rose 3.07 percent to 3,911.74 points.
Since its plunge last week to an 18-month low, the S&P 500 has regained more than 7 percent, and the Nasdaq nearly 10 percent.
“Stocks rose after an indicator showed that inflation expectations were easing and also following optimistic comments (from Fed St. Louis Branch President James) Bullard on the economy,” explained Edward Moya of Oanda in a note.
The final version of the University of Michigan survey for June showed that respondents had slightly lowered their one-year inflation expectations to 5.3% from 5.4%.
Expectations for the next five to ten years were down to 3.1% from 3.3%.
As for James Bullard, the manager estimated on Friday that it was “a little early to discuss the probability of a recession in the United States”. “In fact, I think it will pass” and that we will avoid this scenario, he explained.
To those two items, Tom Cahill of Ventura Wealth Management added new home sales in May, which came in well above expectations. “It’s good to see a better-than-expected number,” the analyst noted, as the latest U.S. macroeconomic indicators have been mostly poor.