The tech-heavy Nasdaq rose 1.9 per cent, ending the month 12.4 per cent higher, while the Dow Jones Industrial Average rose 1 per cent and notched a 6.7 per cent gain for the month.
The latest rally came as investors weighed a mix of company earnings reports and new data showing inflation jumped by the most in four decades last month.
Stock gains in recent weeks have been fueled by better-than-expected corporate earnings reports and falling bond yields, which have pulled back after soaring much of this year on expectations of higher interest rates.
“You’ve had 10-year Treasury yields come down precipitously,” said Rob Haworth, senior investment strategist at US Bank Wealth Management. “With inflation so hot, I think the expectation is the Fed stays on path, but it’s damaging enough for the economy that they’re going to have to pivot in 2023.”
Weak economic data, including a report on Thursday showing that the US economy contracted last quarter and could be in a recession, have also spurred stocks higher by giving some investors confidence that the Federal Reserve will be able to dial back its aggressive pace of rate hikes sooner than expected.
The central bank raised its key short-term interest rate by 0.75 percentage points on Wednesday, lifting it to the highest level since 2018. The Fed is raising rates in a bid to slow the US economy and quell inflation.
An inflation gauge that is closely tracked by the Federal Reserve jumped 6.8 per cent in June from a year ago, the biggest increase in four decades, leaving Americans with no relief from surging prices. On a month-to-month basis, inflation accelerated to 1 per cent in June from May’s 0.6 per cent monthly increase, the Commerce Department said Friday.
The figures underscored the persistence of the inflation that is eroding Americans’ purchasing power, dimming their confidence in the economy and threatening Democrats in Congress in the run-up to the November midterm elections.
Some market watchers advised against placing too much emphasis on the June data, however.
“This inflation metric is for June and we know much has changed since then, especially gas prices, so investors should put this inflation report into historical context,” said Jeffrey Roach, chief economist for LPL Financial. “Looking ahead, July inflation rates will ease a bit from the previous month as food and energy costs should wane in July.”
Exxon and Chevron posted record quarterly profits last quarter amid high oil and gas prices. The two companies made $US46 billion ($66 billion) last quarter and roughly four times the amount of money they made in the same period a year earlier. Chevron shares jumped 8.9 per cent to a six-week high, while Exxon rose 4.6 per cent.
Amazon surged 10.4 per cent for the biggest gain in the S&P 500 after the company posted a quarterly loss, but its revenue jumped sharply in the quarter.
Apple rose 3.3 per cent after its quarterly earnings came in better than Wall Street expected. The iPhone maker saw its profit for the April-June period decline by 10 per cent while revenue edged up 2 per cent as it grappled with manufacturing headaches and inflation pressures.