US open: Stocks rally following inflation data

Wall Street stocks were in the green early on Friday, with the Dow Jones hoping to end what has been a volatile week for trading on somewhat of a high note as fears of rising inflation eased following data that pointed to tamed price pressures.
As of 1550 GMT, the Dow Jones Industrial Average was up 0.51% at 32,787.33, while the S&P 500 was 0.58% firmer at 3,932.28 and the Nasdaq Composite started out the session 0.30% stronger at 13,016.67.

The Dow opened 167.85 points higher on Friday, extending gains recorded in the previous session as cyclical trades picked up steam in afternoon trading.

Stocks were buoyed by news that the Federal Reserve would allow banks to resume buybacks and raise dividends from the end of June, giving investors more clarity despite the central bank actually pushing out the lifting of its pandemic era restrictions from the end of the first quarter to the end of the first half.

After the opening bell, eyes were also on the 10-year treasury note yet again, with the yield on the benchmark note increasing to roughly 1.65% in the early hours after another weak seven-year auction in the US.

Comments from the White House drew an amount of investor attention too, with Joe Biden holding his first press conference as President yesterday, in which he said he would run again in 2024, at age 82, and committed to the US administering 200.0m vaccinations in his first 100 days in office.

However, perhaps the session’s primary focus was a report that revealed personal spending in the US undershot analysts’ forecasts last month but revised figures indicated that incomes had grown significantly more quickly than expected. According to the Department of Commerce, personal incomes and spending fell at a month-on-month pace of 7.1% and 1.0%, respectively, worse than economists’ forecasts for drops of 7.0% and 0.6%. However, data for January was revised higher, with personal incomes now estimated to have increased by 3.4% on the month, against a prior estimate of 2.4%.

Elsewhere on the macro front, February’s goods trade balance fell to a reading of -$86.7bn, bigger than expectations for a reading of -$86.0bn and the largest deficit on record, while January’s reading was revised to -$84.6bn from $83.7bn.

Still on data, consumer spirits in America were buoyed in March by government stimulus checks arriving in their mailboxes as the country’s vaccination programme rolled on. The University of Michigan’s closely-followed consumer confidence index rose from a reading of 76.8 in February to 84.9 for March – its highest level in a year. Economists’ had pencilled-in a reading of 83.5.

Last month’s preliminary wholesale inventories report also revealed a 0.5% advance, short of estimates for a reading of 0.8%, while.

Coming up later, the US budget plan for 2022 will be published at 1900 GMT.

In the corporate space, bank stocks were performing well after the open thanks to the Fed update, while reopening plays like United Airlines and Carnival were both up as the day’s session officially began.

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