Stocks Pause On Dismal Consumer Confidence; Yields, Dollar Rise As Inflation Expectations Kick Higher, Bitcoin Sinks: What's Driving Markets Friday? (CORRECTED)

Editor’s note: This story has been updated to correct an error in the price action of Charter Communications stock.

A worse-than-expected University of Michigan May consumer report halted stock gains on Friday, sparking worries about a potential decline in consumer health amid perceived rising price pressures.

The report disclosed that both near-term and long-term inflation expectations have surged beyond projections this month, causing the broader consumer gauge to hit its lowest levels in six months.

“If spending slows down and inflation increases, we'll get the opposite of the Goldilocks scenario that many were hoping for, and the Fed will be in an especially difficult position of choosing between accommodating a slowing economy and fighting increasing inflation expectations,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

Echoing this view, Jeffrey Roach, chief economist for LPL Financial, sees rising risks of stagflation, a concern that could unsettle markets.

At 12:05 p.m. trading in New York, the S&P 500 was 0.1% lower, but it was firmly up by 1.6% for the week, poised to secure a third consecutive week of gains after three of losses.

The Dow Jones Industrial Average was a tad higher, battling to secure the eight straight session of gains, the longest positive streak since December 2023. Tech stocks were flat. Small caps were the underperformers, with the iShares Russell 2000 ETF IWM down 0.9%.

The rising inflation perceptions in the consumer survey rescued the dollar, which eyes a positive weekly close, after two negative ones.

Treasury yields also inched higher by about 4 basis points across all maturities. The 10-year benchmark hit 4.5%.

Gold surged to $2,385/oz, with the SPDR Gold Trust GLD up 0.8%.

The dismal consumer sentiment data sharply weighed on Bitcoin BTC/USD with the largest cryptocurrency dropping over 4% from $63,000 to below $60,500 following the report.

Chart of The Day: Michigan Consumer Sentiment Data Dings Bitcoin

Friday’s Performance In Major US Indices, ETFs

The SPDR S&P 500 ETF Trust SPY was unchanged at $520.20, the SPDR Dow Jones Industrial Average DIA rose 0.2% to $394.65 and the tech-heavy Invesco QQQ Trust QQQ was up 0.1% to $441.38, according to Benzinga Pro data. 

Sector-wise, the Financials Select Sector SPDR Fund XLF outperformed, up 0.5%. The Consumer Discretionary Select Sector SPDR Fund XLY was the major laggard, down 0.6%.

Friday’s Stock Movers

• Novavax Inc. NVAX surged by an astonishing 122%, after the company announced a Covid-19 vaccine licensing deal with Sanofi SNY. The pharmaceutical company reported a lower than expected loss last quarter, but missed revenue estimates.
• MacroGenics Inc. MGNX tumbled by 77% following an interim update on a mid-stage study of a cancer drug candidate, which reported the unfortunate deaths of several study participants. Furthermore, the results for the quarter fell short of expectations.
• Charter Communications Inc. CHTR rose 4.6% after the company started a tender offer to buy back senior secured notes due 2025 for up to $1.7 billion in cash.
• Moderna Inc. MRNA dropped by 4% after the company announced that the FDA won’t finish its review of MRNA’s respiratory syncytial virus (RSV) vaccine by the scheduled action date of May 12 due to administrative constraints. The FDA has communicated that it anticipates completing the review by the end of May.
• Companies reacting to earnings were Gen Digital Inc. GEN up 15%, Mettler-Toledo International Inc. MTD up 14%, Akamai Technologies Inc. ANET down 10%, Ubiquiti Inc. UI up 8%, DigitalOcean Holdings Inc. DOCN up 6.6%, Construction Partners Inc. ROAD up 2.6%, Sylvamo Corp. SLVM down 5%, Costamare Inc. CMRE up 1.3%, Marathon Digital Holdings Inc. MARA down 8%, Insulet Corp. PODD down 4%, H&R Block Inc. HRB up 9.7%, and Genpact Ltd. G up 5.7%.

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Image generated using artificial intelligence via Midjourney.