Wall Street Falters Despite Drops In Fed’s Favorite Inflation Rate; Energy Stocks, Yields Rise On Trump’s Debate Performance: What’s Driving Markets Friday? – Baker Hughes (NASDAQ:BKR)

Wall Street experienced a lackluster session during midday trading in New York, with major indices inching slightly lower despite the arrival of positive inflation data.

In May 2024, the Personal Consumption Expenditure (PCE) price index, the Federal Reserve’s key measure of inflation, fell to its lowest level since March 2021, recording an annual rate of 2.6%, which aligned with economists’ predictions.

This inflation report further indicates that price pressures are moving towards the Fed’s 2% target, reinforcing market expectations for potential interest rate cuts.

However, there is more caution in the market reactions this time, potentially because investors are evaluating the political and economic implications stemming from the first presidential debate held Thursday night between President Joe Biden and former President Donald Trump, with most political analysts indicating a landmark win for the latter.

Energy stocks were the top performers among S&P 500 sectors on Friday, despite no concurrent gains in oil and gas prices, likely welcoming rising chances of Trump’s return to the White House.

Treasury yields rose across the curve, with the bond market beginning to price in a new increase in expansionary fiscal policies from the potential next president. The iShares Treasury Bond ETF TLT fell by 1.3%.

Semiconductors are set to experience their second consecutive week of losses, while regional banks shine, with the SPDR S&P Regional Banking ETF KRE potentially marking its best weekly performance since the beginning of the year.

Major commodities are little changed, with gold flat and oil down by 0.5%. Bitcoin BTC/USD remains stuck around the 60,500 mark, down by 1.5%.

Friday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 0.1% lower to $546.02.
• The SPDR Dow Jones Industrial Average DIA was flat at $391.69.
• The tech-heavy Invesco QQQ Trust (ARCA: QQQ) was 0.1% lower to $481.19.
• Sector-wise, the Energy Select Sector SPDR Fund XLE outperformed, up by 0.9%, while the Utilities Select Sector SPDR Fund XLU lagged, falling 1.3%.