Market developments
Equities:
U.S. stocks climbed after data showed consumers tempered their inflation expectations in late May. The S&P 500 had its fifth straight week of gains, the longest bullish streak since February. It topped 5,300 and the Nasdaq 100 rose 1.7%, with Nvidia heading toward a fresh all-time high after better than expected earnings. However, the equity rally risks overheating according to Bank of America, with 70% of indexes trading above their 50- and 200-day moving averages, nearing a contrarian sell signal.
Fixed income:
While Fed minutes showed openness to further tightening if needed, resilient earnings suggest positive economic news may have less straightforward impact. The tempered inflation expectations bode well for prospects of Fed rate cuts, as easing demand could help bring down inflation. Treasury yields up slightly, with the 2-year yield at 4.93%, as the bond market closed early ahead of the Memorial Day holiday.
Commodities:
Oil futures rose on Friday but posted weekly losses as traders feared the Federal Reserve might maintain high interest rates for longer than expected, potentially dampening demand due to an economic slowdown. A lack of clear signals left traders unconvinced, resulting in directionless trading ahead of the U.S. holiday weekend.