Stocks jumped out of the gate Friday and never looked back. Boosting market sentiment was an encouraging reading on inflation – which hit just ahead of next week’s Fed meeting – and a round of well-received earnings reports.
Key Takeaways
- Dow Jones Industrial Average surged by 654 points, closing at 40,589.
- 3M (MMM) stock soared 22.9%, marking its biggest one-day gain since January 1972.
- Lower inflation data and positive earnings reports fueled market optimism.
- Dexcom (DXCM) stock plunged 40.7% after missing revenue estimates.
- Deckers Outdoor (DECK) stock rose 6.4% following strong quarterly results.
Inflation Data Boosts Market Sentiment
Ahead of the market open, the Bureau of Economic Analysis reported that the Personal Consumption and Expenditures (PCE) Price Index rose 0.3% from May to June. The annual increase slowed to 2.5% from 2.6% the previous month. Core PCE, which excludes volatile food and energy prices, was up 0.2% month-to-month and 2.6% year-over-year.
Personal income rose at a slower-than-expected 0.2% monthly rate in June, while spending increased 0.3%. This data suggests that the Federal Reserve is getting closer to cutting rates, which could further boost stocks.
Impact on Merger and Acquisition Activity
Lower inflation data could also spark a rebound in merger-and-acquisition (M&A) activity. According to Mark Williams, Chief Revenue Officer at Datasite Americas, global sell-side kickoffs on Datasite are up 17% in the first six months of 2024 compared to the same period a year ago, while global buy-side deal kickoffs have increased by 21%.
Single-Stock Highlights
- 3M (MMM): The Post-it maker beat top- and bottom-line expectations for its second quarter and raised the low end of its full-year profit forecast. The stock surged 22.9%, marking its biggest one-day gain since January 1972.
- Dexcom (DXCM): The company, which makes continuous glucose monitoring devices, saw its stock plunge 40.7% after missing revenue estimates for its second quarter and lowering its full-year revenue forecast.
- Deckers Outdoor (DECK): The parent company of Ugg and Hoka topped revenue and earnings estimates for its fiscal first quarter and raised its full-year profit forecast. The stock rose 6.4%.
Market Performance
The Dow Jones Industrial Average handily outperformed, adding 1.6% to close at 40,589. The S&P 500 rose 1.1% to 5,459, and the Nasdaq Composite gained 1% to 17,357.
Future Outlook
While today’s PCE report suggests that the Federal Reserve is getting closer to cutting rates, there is still a lot of data to be seen between now and the September meeting, including two Consumer Price Index (CPI) prints. Futures traders are currently pricing in an 88% chance that the Fed will cut rates by a quarter-percentage point in September.
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