Wall Street was lower on Friday though global equities were still poised for weekly gains, as upbeat earnings helped sustain the rally sparked by a U.S.-China trade truce. Oil prices remain relatively low, further supporting stocks and bonds.
U.S. consumer sentiment slumped further in May as one-year inflation expectations surged as households remained concerned about the economic impact of President Donald Trump’s aggressive and often erratic trade policy, a University of Michigan survey showed.
Yields on U.S. Treasuries fell after data showed weaker housing starts than expected. Wall Street’s main indexes were lower on Friday, but were still on track for a robust weekly gain. MSCI’s gauge of stocks across the globe retreated 0.09%.
The Down Jones Industrial Average fell 0.03%, the S&P 500 retreated 0.07% and the Nasdaq Composite was down 0.27%. It had largely been a positive week for global equity markets, as investors cheered a tariff truce between the United States and China that greatly reduces the risk of a global recession.
The pan-European STOXX 600 index rose 0.13% and was set for its fifth straight week of gains. U.S. import prices unexpectedly rose in April as a surge in the cost of capital goods offset cheaper energy products.
MSCI’s main gauge of Asia-Pacific stocks ex-Japan rose more than 3% this week, and the S&P 500 is up 4.5% so far. Oil prices have been choppy this week, rising on the U.S.-China deal, before falling 2% on Thursday on increased supply pressure from an OPEC output hike and the prospect of an Iranian nuclear deal.
Brent futures recovered slightly on Friday, and were set to end the week higher. Oil prices – low by recent standards – are helping support expectations that inflation is easing, as is Thursday’s U.S. data, which did not show any dramatic impact from U.S. tariffs, helping both shares and bonds.
U.S. core retail sales were soft and producer prices fell unexpectedly in April, increasing market bets to 57 basis points of easing from the Federal Reserve this year, from 49 bps. The benchmark 10-year Treasury yield fell 2.2 basis points, extending Thursday’s drop. Euro zone government bond yields were also lower.
Walmart, the world’s largest retailer, said it would have to start raising prices later this month due to the high cost of tariffs. On Wall Street, Charter Communications rose 1.4% after it said it agreed to merge with Cox Communications in a deal that would combine two of the country’s largest cable companies. The resulting company will change its name to Cox Communications and keep Charter’s headquarters in Stamford, Connecticut.
Novo Nordisk’s stock that trades in the United States fell 1.8% after the Danish company behind the Wegovy drug for weight loss said that Lars Fruergaard Jørgensen will step down as CEO and that the board is looking for his successor. The company cited “recent market challenges” and how the stock has been performing recently.
The dollar edged higher against a basket of currencies. Spot gold fell 2.12% to $3,171.20 an ounce, erasing the previous session’s gains.
In the bond market, Treasury yields were mixed. The yield on the 10-year Treasury fell to 4.43% from 4.45% late Thursday and from more than 4.50% the day before that. Lower bond yields can encourage investors to pay higher prices for stocks and other investments.
The two-year Treasury yield, which more closely tracks expectations for action by the Federal Reserve, rose to 3.97% from 3.96%. It had been as low as 3.93% earlier in the morning, before the release of the University of Michigan’s survey.
