NEW YORK U.S. stocks rose Friday after mixed signals on big bank profits and inflation failed to shake Wall Street's belief that lower interest rates are on the way.
The S&P 500 index rose 0.6% to close out its fifth week of gains in the past six weeks. The Dow Jones Industrial Average gained 247 points, or 0.6%, and the Nasdaq Composite added 0.6%. All three indexes were on track for all-time highs in afternoon trading but ended below.
Bank of New York Mellon rose 5.2%, one of the market’s biggest gainers after reporting spring profit that beat analysts’ expectations. Nvidia and other big tech stocks also helped lift the market after a slide the day before that halted their meteoric rise amid a frenzy over artificial intelligence technology.
Those numbers helped offset a decline at Wells Fargo, which fell 6% despite beating analysts' expectations. The San Francisco-based bank said a key profit metric fell from a year ago and its net interest income could remain in the lower half of the range it had forecast for the full year.
In the bond market, which has seen some of the strongest action on Wall Street this week, Treasury yields fluctuated after the latest inflation update. Wholesale prices rose more than expected last month, disappointing after data released Thursday showed consumer inflation was better than expected.
But after some initial fluctuations, Treasury yields calmed and remained lower than they were late Thursday.
It will be some time before we know whether yesterday's number or today's was the aberration, said Chris Larkin, managing director of trading and investments at Morgan Stanley's E-Trade.
Part of the acceleration in Friday's data could be the result of higher corporate profit margins, which can fluctuate widely and which some analysts have called unrelated to the Federal Reserve's inflation fighters.
Another factor that helped keep yields steady was a report suggesting that U.S. households are no longer worried about such high inflation in the future. According to preliminary data from the University of Michigan, U.S. consumers are expecting inflation to be 2.9% for the coming year.
This is the second straight month that those expectations have eased. That helps ease concerns about a potential spiral in which expectations of high inflation could push U.S. consumers into behavior that pushes inflation higher. That in turn could give the Federal Reserve more evidence of the slowdown in inflation it needs to start cutting its key interest rate, which is at its highest level in more than two decades.
After climbing as high as 4.23% following headline inflation reports, the yield on the 10-year Treasury note fell to 4.18% from 4.21% late Thursday. It is down from 4.70% in April as hopes have grown that inflation is slowing enough to convince the Fed to cut short-term rates.
Traders are pricing in a 94% chance that the Federal Reserve will begin cutting rates in September, according to CME Group data. A rate cut would help ease pressure that has built up on the economy due to the high cost of borrowing to buy homes, cars and other credit card products. Fed officials, however, have said they want to see more positive inflation data before making a decision.
Lower interest rates would help all types of companies, and smaller ones could benefit especially greatly as they borrow to grow. Smaller stocks in the Russell 2000 rose more than the S&P 500 on Thursday, snapping a long-running trend, and that continued Friday.
The Russell 2000 index rose 1.1%, nearly double the gain of the S&P 500, and capped its best week in eight months.
Overall, the S&P 500 rose 30.81 points to 5,615.35. The Dow Jones Industrial Average gained 247.15 points to 40,000.90 and the Nasdaq Composite gained 115.04 points to 18,398.45.
Of course, traders have a history of prematurely anticipating rate cuts. JPMorgan Chase CEO Jamie Dimon warned Friday that inflation and interest rates could remain higher than the market expects because of rising U.S. government debt and other factors.
In overseas stock markets, Japan's Nikkei 225 index lost some of its recent record high and fell 2.4 percent, although it is still up more than 23 percent since the start of the year.
The indices were mixed in the rest of Asia and higher in much of Europe.
