Wall Street closed out a holiday-shortened week with the S&P 500 posting its eighth consecutive weekly gain, the longest such streak since late 2023. The Dow Jones Industrial Average also set a new all-time high on Friday, finishing at 50,579.70, up 294.04 points, or 0.58%. The S&P 500 rose 27.75 points, or 0.37%, to 7,473.47, while the Nasdaq Composite added 50.87 points, or 0.19%, to 26,343.97.
U.S. markets will remain closed on Monday for Memorial Day, resuming Tuesday. The shortened week puts extra emphasis on key economic data, particularly the April personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, due Thursday at 8:30 a.m. EDT. In March, headline PCE rose 3.5% year over year, with core PCE (excluding food and energy) up 3.2%.
Investors are also watching for the final wave of earnings reports, including results from Costco (COST), Best Buy (BBY), and Dollar Tree (DLTR), as well as Salesforce (CRM) and Dell (DELL). Nvidia (NVDA) recently guided for $91 billion in second-quarter revenue, exceeding expectations and reinforcing robust AI-related spending trends, according to Edward Jones analyst Brock Weimer. Qualcomm (QCOM) jumped 12% on Friday, while Dell and HP (HPQ) also climbed on better revenue from Lenovo.
Bond yields remain a focal point. The 10-year Treasury yield touched 4.69% this week, the highest since January 2025, before settling back to 4.56%. Rising yields can pressure stocks by increasing borrowing costs and making equities appear less attractive. Greg Faranello at AmeriVet Securities noted that higher yields could push mortgage rates up, while Sam Lynton-Brown at BNP Paribas observed that stocks and credit have so far held up well with elevated yields.
Federal Reserve minutes from the April meeting indicated that most officials believe some policy firming may be needed if inflation remains above the 2% target. The central bank kept its target range at 3.5% to 3.75% at that meeting, with the next decision scheduled for June 16-17.
Geopolitical developments provided some support, with signs of progress in U.S.-Iran negotiations helping to ease concerns. However, risks remain, including potential disruptions in the Strait of Hormuz that could impact energy prices and fuel inflation worries.
UBS Global Wealth Management raised its S&P 500 target for 2026 to 7,900 from 7,500, citing solid consumer spending and strong data center demand, implying about 6% upside from Friday's close. Morgan Stanley has set a year-end target of 8,000.
With earnings season largely behind them, traders will rely more heavily on the upcoming inflation data to gauge the market's direction. A hot PCE reading, fresh oil concerns, or another yield spike could trigger a mild pullback, but strong corporate profits and a resilient market have so far supported the rally.
