The U.S. stock market continued its strong rebound from the first quarter, with the S&P 500 extending its winning streak to nine consecutive weeks. Technology shares led the advance, helping the NASDAQ gain 2.4% for the week, while the S&P 500 rose 1.4% and the Dow added 0.9%.
Inflation remained stubbornly elevated. For the second time in three weeks, a key report showed price growth running at its fastest pace since May 2023. The Personal Consumption Expenditures (PCE) Price Index rose at a 3.8% annual rate in April, matching the recent Consumer Price Index reading. Core PCE inflation, which excludes food and energy, came in at 3.3%.
Oil prices declined for a second straight week as investors grew more optimistic about the latest round of U.S.-Iran negotiations. U.S. crude traded near $88 per barrel on Friday afternoon, down nearly 10% for the week and about 16% for the month of May.
Despite cooling from April’s exceptionally strong rally, equities delivered another solid month of gains. The NASDAQ advanced 8.4% in May, the S&P 500 gained 5.1%, and the Dow rose 2.8%. April had produced even stronger results, with both the NASDAQ and S&P 500 posting double-digit monthly returns.
Economic growth in the first quarter was revised lower. The Commerce Department reported that GDP expanded at a 1.6% annualized pace from January through March, down from the initial estimate of 2.0%, reflecting weaker consumer spending and business investment than previously reported.
Analysts have become increasingly optimistic about corporate earnings. According to FactSet, forecasts for second-quarter S&P 500 earnings rose 2.5% during April and May, ahead of reporting season, which begins in mid-July.
International markets also showed strength. Stock indexes in both South Korea and Japan reached record highs on Friday. A South Korean benchmark surged nearly 11% for the week, fueled by enthusiasm surrounding AI-related companies, while a major Japanese index gained nearly 2%.
Looking ahead, Friday’s employment report will provide insight into whether the labor market maintained its recent momentum. In April, the U.S. added a stronger-than-expected 115,000 jobs following March’s gain of 185,000, marking a departure from the alternating pattern of monthly gains and losses that characterized much of the previous 10 months.