Stocks rally despite inflation uptick, Biden’s $6T budget

Core PCE rises 3.1% year over year in April, most in at least 28 years

U.S. equity markets flirted with record highs Friday as President Biden unveiled his $6 trillion budget proposal and investors sifted through economic data and earnings reports.

The Dow Jones Industrial Average gained 65 points or 0.19%, while the S&P 500 and the Nasdaq Composite advanced 0.08% and 0.09%, respectively. Both the Dow and the S&P 500 finished within 0.7% of their respective all-time highs. The Nasdaq was 2.8% off its own record peak.  

The major averages posted weekly gains as the month of May wrapped up with the Dow rising 1.9%, the S&P 500 0.6%,  while the Nasdaq slipped 1.5%, the first down month since October.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 33823.45 -210.22 -0.62%
SP500 S&P 500 4221.86 -1.84 -0.04%
I:COMP NASDAQ COMPOSITE INDEX 14161.350236 +121.67 +0.87%

Biden’s proposed budget would fund massive social programs including universal prekindergarten and subsidies for childcare and raise the capital gains tax retroactively to late April. It would result in a $1.8 trillion deficit. 

Looking at the economic calendar, personal income fell 13.1% in April as the prior month's boost from stimulus checks faded. Personal spending, meanwhile, ticked up 0.5%. Economists surveyed by Refinitiv were expecting personal income to decline 14% and consumer spending rose 0.5%.

Elsewhere in the economy, core personal consumption expenditures, which exclude food and energy, jumped 0.7% month over month and 3.1% annually, which was the biggest reading in at least 28 years. The 1.2 percentage point annual increase from March was the largest since recordkeeping began in 1960. 

AMC, GME, VIRGIN GALACTIC SHORT SELLERS LOSE $2.7B THIS WEEK

In stocks, the short squeeze in AMC Entertainment Holdings Inc. and GameStop Corp. petered out as shares in both companies fell for the first time this week. AMC shares had rallied 120% while GameStop shares spiked 44% during the week's first four trading days.

Ticker Security Last Change Change %
AMC AMC ENTERTAINMENT HOLDINGS INC 60.73 +5.55 +10.06%
GME GAMESTOP 223.59 +0.62 +0.28%

Boeing Co. paused deliveries of its 787 Dreamliner jets due to production problems, according to The Wall Street Journal. The length of the delay is unknown. \

Ticker Security Last Change Change %
BA THE BOEING CO. 239.22 -3.05 -1.26%

In earnings, Salesforce.com Inc. beat on both the top and bottom lines and guided above analysts’ expectations. Revenue from its core cloud product was up 11% year over year. 

Dell Technologies Inc. and Hewlett-Packard Co. said the global chip shortage could impact their abilities to meet the demand for laptops this year. Both companies exceeded Wall Street estimates for earnings and revenue.  

COSTCO SIGNALS INFLATION SHIPPING COSTS IN PLAY

Ticker Security Last Change Change %
CRM SALESFORCE.COM, INC. 244.43 +2.04 +0.84%
DELL DELL TECHNOLOGIES 99.65 -3.10 -3.02%
HPQ HP, INC. 28.64 -0.39 -1.34%

Costco Wholesale Corp. received several analyst upgrades after the reporting quarterly sales surged 21.7% year over year to $44.38 billion. 

Ticker Security Last Change Change %
COST COSTCO WHOLESALE CORP. 384.75 +5.34 +1.41%

In commodities, West Texas Intermediate crude oil lost 40 cents to $66.45 per barrel and gold added $6.30 to $1,904.80 an ounce. 

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Overseas markets were mostly higher. 

France’s CAC 40 paced the advance in Europe, trading up 0.75%, while Germany’s DAX 30 and Britain’s FTSE 100 rose 0.74% and 0.04%, respectively. 

In Asia, Japan’s Nikkei 225 surged 2.1%, Hong Kong’s Hang Seng index edged up 0.04% and China’s Shanghai Composite slid 0.22%.