Wall Street Extends Winning Streak with Strong Stock Gains

Wall Street experienced another record-breaking day on Friday, as major stock indices extended their winning streak and capped off a month of notable gains. The S&P 500 saw a 0.2% increase, marking its seventh consecutive gain and ninth straight winning week. This represents the longest streak since 2023. The index set an all-time high for the fourth consecutive day.

The Dow Jones Industrial Average climbed 0.7%, while the Nasdaq composite rose by 0.2%. Both the Dow and Nasdaq reached new heights following earlier record highs in the week.

Technology stocks have largely fueled this record-breaking run. Their high stock values give them significant sway over market movement. In May, technology stocks within the S&P 500 increased by over 15%, even as most other sectors within the benchmark index experienced declines. Angelo Kourkafas, senior global strategist at Edward Jones, noted in a research note that the rally is powered mainly by technology and strong earnings. The question remains whether the rally can sustain itself.

Technology stocks boosted the market on Friday as well. Microsoft saw a 5.4% rise, and Broadcom increased by 4.7%. Dell Technologies led the S&P 500 with a 32.8% surge after reporting profits that surpassed expectations. The company also raised its outlook, citing strong demand for AI computing.

Several other sectors in the S&P 500 faced declines on Friday. Paramount Skydance fell 1.9%, Amazon.com decreased by 1.2%, and Costco Wholesale closed 3.9% lower.

Despite concerns over a worsening U.S.-Iran conflict, which could exacerbate inflation, Wall Street has continued to gain ground. Both countries are reportedly working towards extending a ceasefire, which led to reduced pressure on oil prices. Brent crude for August delivery decreased by 1.7% to $91.12 per barrel, a significant drop from prices above $70 in late February before the conflict started. U.S. crude oil for July delivery also fell 1.7%, settling at $87.36.

Treasury yields remained mainly steady amidst falling oil prices. The yield on the 10-year Treasury note slightly dipped to 4.44% from 4.45% on Thursday.

High oil prices remain a significant concern for Wall Street. The conflict has disrupted oil shipments through the Strait of Hormuz, a critical passage for about one-fifth of the world’s oil and natural gas. This disruption has caused hikes in gasoline and various goods, contributing to inflation and impacting consumers and businesses.

Recent reports have highlighted the rise in inflation and its effect on consumers. A key inflation measure preferred by the Federal Reserve accelerated in April, reaching its highest level in three years. As inflation rises, consumer confidence has been slipping.

Wall Street’s inflation worries have been somewhat alleviated by recent corporate profit reports. Companies in the S&P 500 reported a 28% profit growth for the most recent quarter, according to FactSet. Most S&P 500 companies have already presented their latest results, suggesting investor focus may revert to inflation, consumer behavior, and the Federal Reserve’s next moves regarding interest rates.

The Fed has been maintaining its benchmark interest rate while monitoring rising inflation closely. According to CME’s FedWatch tool, the Fed is expected to maintain steady rates through the next meeting in June and for the rest of the year. Cutting interest rates could potentially reduce borrowing costs and stimulate the economy. However, it might worsen inflation when prices are already high and rising.

Despite market turbulence stemming from the Middle East conflict, stocks advanced further in May. The S&P 500 ended the month with a 5.1% gain, marking a 10.7% increase for the year.

By the end of Friday, the S&P 500 added 16.43 points to reach 7,580.06. The Dow increased by 363.49 points to 51,032.46, and the Nasdaq gained 55.15 points to close at 26,972.62. European and Asian markets also saw mostly positive performance.