US stock markets achieved new milestones on Thursday, with both the Nasdaq and S&P 500 closing at record highs despite mixed inflation data. According to CNN, the S&P 500 rose 0.5% and the Nasdaq gained 0.6% in the latest trading session. This followed Wednesday's performance where all three major US indexes closed at record highs, demonstrating continued investor confidence despite ongoing economic and geopolitical uncertainties. The markets' ability to reach new peaks despite inflation concerns reflects strong underlying fundamentals and positive investor sentiment.
The personal consumption expenditures (PCE) price index rose 0.4% on a seasonally adjusted basis in April, according to the Commerce Department as reported by NDTV Profit. Economists polled by Dow Jones had expected a 0.5% monthly increase and an annual reading of 3.8%. The slightly softer monthly print offered some relief to markets, suggesting that pricing pressures may be gradually easing. However, inflation remains above the Federal Reserve's 2% target on a year-on-year basis, keeping the broader policy outlook cautious. The core PCE inflation rate came in at 3.3% annually, matching economist expectations and representing the highest level since November 2023, while excluding food and energy, core prices rose 0.2% monthly.
Iran's Islamic Revolutionary Guard Corps launched an attack targeting a US air base that Tehran said was used in earlier American strikes on Iranian targets, according to CNN. The US strikes had targeted Iranian drones and a launch site near the Strait of Hormuz, as reported by a US official. These escalating tensions between the US and Iran kept optimism surrounding a potential peace deal in check, adding another layer of uncertainty to market sentiment. The military action provided a counterbalance to the positive inflation data, creating a mixed environment for market participants.
Oil prices rebounded significantly with West Texas Intermediate crude oil futures rising about 2% to top $90 per barrel and Brent futures rising 2% to hit $96, according to NDTV Profit. This increase in energy prices occurred despite the positive inflation data and escalating Iran tensions, adding some pressure to market sentiment as oil prices continue to influence broader economic conditions. The oil price movement reflects ongoing supply-demand dynamics in the energy sector amid heightened geopolitical risks.
Recent economic data revealed initial jobless claims for the week ended May 23 totaled 215,000, up 5,000 from the prior period and slightly above the 213,000 forecast, according to the Labor Department. Durable goods orders soared 7.9% in April, well ahead of the 3.5% estimate, though excluding transportation, new orders were up only 1.1%. Consumer spending increased 0.5% in April, meeting forecasts, while income remained flat against estimates for a 0.4% increase. The personal savings rate fell to 2.6%, its lowest since June 2022, indicating much of the spending boom came from savings drawdown. GDP growth in Q1 was revised down to 1.6% annualized, below the initial estimate of 2% due to downward revisions to consumer spending and investment.
The currencies front remained muted with the Dollar Spot Index little changed, as reported by NDTV Profit. The euro was little changed at $1.1633, the British pound was little changed at $1.3417, and the Japanese yen was little changed at 159.39 per dollar. Bitcoin, the largest traded cryptocurrency, fell 2.9% to $72,941.04, showing continued volatility in digital asset markets despite the overall market stability and record-breaking performance in traditional equities.
