U.S. stocks moved slightly higher on Friday, continuing their recent upward trend, supported by a stable ceasefire between Israel and Iran, signs of easing trade tensions, and new inflation data closely watched by the Federal Reserve.
As of 9:32 a.m. ET, the Dow Jones Industrial Average was up 120 points (0.3%), the S&P 500 rose 15 points (0.3%), and the NASDAQ gained 60 points (0.3%). All three major indexes are on pace to close the week with solid gains.
Cooling Inflation Helps Sentiment
Market optimism was fueled by continued calm in the Middle East and an agreement between the U.S. and China to accelerate the shipment of rare earth materials—vital to a range of industries.
Adding to the positive tone, White House Press Secretary Karoline Leavitt indicated that President Donald Trump may extend the current 90-day pause on reciprocal tariffs, reducing concerns about the administration’s trade policies.
With geopolitical and trade tensions easing, investor attention has shifted back to the U.S. economy and how the Federal Reserve might respond.
In May, the Fed’s preferred inflation measure—the personal consumption expenditures (PCE) price index—rose 0.1% month-over-month, in line with forecasts and April’s reading. Year-over-year, PCE increased 2.3%, slightly above the revised 2.2% gain in April.
The core PCE index, which excludes food and energy prices, rose 0.2% monthly and 2.7% annually—both slightly higher than expected.
“The slightly stronger core PCE is mildly hawkish compared to earlier, softer CPI and PPI data, but overall inflation remains stable,” analysts at Vital Knowledge wrote. “The Fed would likely be cutting rates now if not for ongoing tariff risks.”
The future of interest rate policy remains uncertain as the Fed continues to evaluate how inflation and trade policy are interacting. For now, the central bank is taking a wait-and-see approach.
Meanwhile, U.S. GDP contracted by 0.5% on an annualized basis in the first quarter—the economy’s first decline since 2022.
Nike Shares Jump After Strong Earnings
Nike (NYSE: NKE) stock rallied after the company reported fiscal Q4 results that beat Wall Street expectations. Executives said the financial drag from its restructuring efforts may have reached a low point.
The company also announced plans to shift more of its manufacturing out of China and into the U.S. to reduce potential tariff-related costs.
Bank Stocks in Focus as Fed Releases Stress Test Results
The banking sector is also in the spotlight, with the Federal Reserve set to publish results of its annual stress tests later today. Analysts expect that most major banks will pass, demonstrating sufficient capital to weather a major downturn. This year’s test is expected to be less severe than in past years.
Oil Prices Slide Despite Friday Rebound
Crude oil prices rose slightly on Friday, but both Brent and WTI remain on track for their biggest weekly losses in over two years. The Israel-Iran ceasefire has reduced geopolitical risk, which had previously propped up oil prices.
As of 9:32 a.m. ET, Brent crude was up 0.6% to $67.10 per barrel, while West Texas Intermediate (WTI) rose 1% to $65.91 per barrel. Both benchmarks are headed for weekly declines of around 12%—the steepest drop since March 2023.
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