Wall Street opens in the green as inflation comes in as expected

Wall Street got off to a positive start on Friday morning after the latest US inflation reading was in line with the market’s expectations.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.49% at 34,365 while the S&P 500 climbed 0.21% to 4,275 and the Nasdaq rose 0.18% to 14,395.

Sentiment appears to have improved following the inflation data, which saw the US PCE inflation rise to 3.9% in May from 3.6% in April.

Despite an increase, investors appear to have been relieved that inflation did not increase even more.

7:50am: Wall Street to head higher

The main indices on Wall Street are pointing to a positive finish to the week after Biden’s US$600bn infrastructure deal was agreed, paving the way for investment in roads, bridges and broadband.

“The deal was less ambitious than what Biden had hoped for and that could explain treasury yields and the US Dollar have remained downbeat this week despite the Fed’s more hawkish stance,” said Sophie Griffiths, analyst at OANDA.

“All eyes will now be on PCE data which will almost certainly support the Fed’s hawkish shift.”

The core PCE deflator is expected at 3.4% year-on-year, up from 3.1% the month before, though the month-on-month is expected to slow to 0.6% from 0.7% the previous month, according to Markets.com.

The month-on-month is the most significant one as it will show whether inflation is as transitory as the Fed has been saying.

The Dow Jones Industrial Average is expected to jump 103 points to 34,184, the S&P 500 to add 4 points to 4,260 and the Nasdaq 21 points to 14,375 at the open.

Four things to watch for on Friday:

• Companies in the earnings diary at the end of the week include outsourcing services provider Paychex Inc (NASDAQ:PAYX), used car seller CarMax Inc (NYSE:KMX) and biotech firm Replimune Group Inc (NASDAQ:REPL)
• Shares in Virgin Galactic Holdings Inc (NYSE:SPCE) will be in focus after the company secured approval from the FAA to send customers into space
• Electric car maker Tesla Inc (NASDAQ:TSLA) may also draw attention after Panasonic sold its stake in the firm for almost US$4bn
• On the macro front, aside from the inflation data US personal income numbers will also be in focus

Story by ProactiveInvestors