The broader market has seemingly shaken off fears about the Israel-Iran war disrupting the global supply of crude oil and sending prices higher. A ceasefire between the two nations is still in place.
The price of crude oil in the US rose 0.4 per cent to $US65.52 a barrel. Prices have fallen back to pre-conflict levels.
Investors are also monitoring potential progress on trade conflicts between the US and its trading partners, specifically China. The two countries have signed a trade deal that will make it easier for American firms to obtain magnets and rare earth minerals from China that are critical to manufacturing and microchip production, US Treasury Secretary Scott Bessent said Friday.
China’s Commerce Ministry also said that the two sides had “further confirmed the details of the framework” for their trade talks. But its statement did not explicitly mention an agreement to ensure US access to rare earths, and instead said it will review and approve “eligible export applications for controlled items.”
Meanwhile,Trump said he has identified a buyer for the US operations of TikTok social media app owned by Chinese company ByteDance, but he won’t provide details for two weeks.
“We have a buyer for Tiktok, by the way. I think I’ll need probably China approval and I think President Xi will probably do it,” he said, referring to Chinese leader Xi Jinping, in an interview on Fox News’s Sunday Morning Futures with Maria Bartiromo. “It’s a group of very wealthy people.” The interview, which aired on Sunday, was taped on Friday.
An update on inflation Friday showed prices ticked higher in May, though the rate mostly matched economists’ projections.
Inflation remains a big concern for businesses and consumers. Trump’s on-again-off-again tariff policy has made it difficult for companies to make financial forecasts. It has also put more pressure on consumers worried about already stubborn inflation. A long list of businesses from carmakers to retailers have warned that higher import taxes will likely hurt their revenues and profits.
The US has 10 per cent baseline tariffs on all imported goods, along with higher rates for Chinese goods and other import taxes on steel and autos. The economy and consumers have remained somewhat resilient, though analysts and economists expect to see the impact grow as import taxes continue to work their way through businesses to consumers.
“While we also would have expected to already be seeing a bit more passthrough into the inflation statistics, we still expect these impacts to show up in a more meaningful way in the next few months,” said Greg Wilensky, head of US fixed income and portfolio manager at Janus Henderson.
The threat of more severe tariffs continues to hang over the economy. The current pause on a round of retaliatory tariffs against a long list of nations is set to expire in July. Failure to negotiate deals or further postpone the tariffs could once again rattle investors and consumers.
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The Federal Reserve is monitoring the tariff situation with a big focus on inflation. The rate of inflation has been stubbornly sitting just above the central bank’s target of 2 per cent. In a report Friday, its preferred gauge, the personal consumption expenditures index, rose to 2.3 per cent in May. That’s up from 2.2 per cent the previous month.
The Fed cut interest rates three times in late 2024 following a historic series of rate hikes to cool inflation. The PCE was as high as 7.2 per cent in 2022 while the more commonly used consumer price index hit 9.1 per cent.
The Fed hasn’t cut rates so far in 2025 over worries that tariffs could reignite inflation and hamper the economy. Economists still expect at least two rate cuts before the end of the year.
Bond yields held relatively steady. The yield on the 10-year Treasury rose to 4.27 per cent from 4.24 per cent late Thursday. The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do, edged up to 3.74 per cent from late Thursday.
All told, the S&P 500 rose 32.05 points to 6,173.07. The Dow gained 432.43 points to 43,819.27, and the Nasdaq added 105.55 points to 20,273.46.
Stocks in Europe were mostly higher, while stocks in Asia finished mixed.
AP
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