Stocks Pop on Upbeat Inflation Data; Apple Hits $3T Market Cap

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Stocks shot higher out of the gate Friday and stayed there through the close thanks to an encouraging reading on inflation.

That data followed other recent reports showing a resilient U.S. economy – and tempered expectations for two more interest rate hikes this year.

Ahead of the opening bell, the Bureau of Economic Analysis said the May personal consumption and expenditures (PCE) index was up 0.1% month-over-month and 3.8% year-over-year. Markets were happy to see the PCE index – the Fed's preferred measure of inflation tracking consumer spending – decelerate vs April's increase. Core PCE, which excludes volatile energy and food prices, also rose at a slower pace on both a monthly and annual basis.

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Additionally, the data showed that personal income rose 0.4% month-over-month in May, while consumer spending ticked 0.1% higher.

"If we saw a hot inflation report, Fed swaps might have been convinced that a second-rate hike by year end was likely," says Edward Moya, senior market strategist at currency data provider OANDA.

But the opposite occurred instead. Data from the CME Group suggests futures traders are now pricing in a higher likelihood of just one more rate hike this year. The central bank is expected to raise rates by 25 basis points (0.25%) at the next Fed meeting in July.

Apple, Nike stocks top movers today

In single-stock news, Apple (AAPL) became the first U.S. company ever to close above the $3 trillion market-cap level. Shares of the blue chip stock jumped 2.3% today to $193.97, bringing its market valuation to $3.05 trillion. Apple first topped a $1 trillion market cap in August 2018, and hit the $2 trillion mark in August 2020. It briefly traded north of $3 trillion on an intraday basis in January 2021.

Friday's session wasn't as fruitful for fellow Dow stock Nike (NKE), though, which tumbled 2.7% after earnings. The athletic apparel and footwear maker said fiscal fourth-quarter earnings plunged nearly 27% year-over-year to 66 cents per share, missing the consensus estimate of 67 cents per share. Revenue was up 5% to a higher-than-anticipated $12.8 billion. Additionally, the company said gross margin fell to 43.6% due in part to elevated shipping expenses and higher markdowns.

Still, Wells Fargo analyst Irwin Boruchow (who rates NKE at Overweight, or the equivalent of Buy) likes the setup from here. "Inventory is realigned, cost pressures are set to flip, China is back above algo and revenue should accelerate from here," Boruchow wrote in a note to clients.

At the close, the Nasdaq Composite was up 1.5% at 13,787, the S&P 500 was 1.2% higher at 4,450, and the Dow Jones Industrial Average had gained 0.8% to 34,407. All three major benchmarks ended the week, month, quarter and half with impressive returns.

Warren Buffett and Apple stock

Apple's unprecedented milestone must have made many investors happy, and surely delighted one major shareholder in particular: Warren Buffett. The Oracle of Omaha's stake in the tech giant makes up nearly half of the Berkshire Hathaway equity portfolio, and for good reason. Buffett has famously said that he considers Apple the holding company's "third business," and that "it's probably the best business I know in the world."

What's more, AAPL has been one of the best dividend stocks among Berkshire's investments, paying $815 million to the firm in 2022 alone. This, of course, is due in part to Buffett's adoration for dividends, which have helped him become one of Wall Street's most skilled investors. But that's not the only reason. Kiplinger Senior Investing Writer Dan Burrows recently took a deep dive into four random facts and thoughts about Warren Buffett that have helped Berkshire Hathaway create jaw-dropping returns. They're certainly worth a closer look.

With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.