Markets
Stocks moved higher last week as inflation jitters gave way to investor enthusiasm over Middle East diplomatic efforts and the largest-ever initial public offering (IPO).
The Standard & Poor’s 500 Index rose 0.65%, while the Nasdaq Composite Index advanced 0.70%. The Dow Jones Industrial Average gained 0.66%. The MSCI EAFE Index, which tracks developed overseas stock markets, added 0.92%.¹²
It Was a Volatile Week
Stocks were mixed on the first day of the week. Chip stocks led advances for the S&P 500 and Nasdaq, while the Dow Industrials sagged.³
The script flipped in the next session as chip stocks fizzled despite a drop in oil prices. The S&P and Nasdaq slipped, while the Dow Industrials gained. The materials, consumer discretionary, and real estate sectors led the market, with real estate rising on better-than-expected existing home sales.⁴
Stocks fell broadly midweek as investors reacted to the May CPI report, which showed year-over-year consumer inflation ticking up to 4.2%.⁵
But sentiment turned positive again on Thursday after the White House provided an update on its ongoing diplomatic efforts in the Middle East.⁶
The week wrapped up on a positive note as the largest IPO appeared to boost investor enthusiasm, particularly for AI, and there were additional updates regarding the Middle East.⁷
Inflation Update
While year-over-year inflation rose to a three-year high due to higher energy prices, Wall Street found some silver linings in the May report.
First, investors saw this coming. The 4.2% “headline” inflation rate matched market expectations, so the news was welcomed.
Second, core inflation rose 2.9% over the prior 12 months, in line with forecasts.
Third, month-over-month CPI cooled slightly, giving investors hope that energy prices may have peaked.
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