U.S. stocks moved slightly higher on Friday, continuing recent gains driven by a stable ceasefire between Israel and Iran, as well as early signs that trade tensions may be easing. Investors also focused on the Federal Reserve’s preferred measure of inflation.
As of 9:32 a.m. ET, the Dow Jones Industrial Average was up 120 points (0.3%), the S&P 500 rose 15 points (0.3%), and the NASDAQ gained 60 points (0.3%). All three indexes are on track for solid weekly gains.
Inflation Stays Moderate
Market sentiment was helped by continued peace between Israel and Iran, along with news that the U.S. and China have agreed on a plan to speed up the delivery of rare earth materials—crucial to various industries.
Adding to the positive tone, White House Press Secretary Karoline Leavitt hinted that President Donald Trump may extend the 90-day pause on reciprocal tariffs, easing concerns over the administration’s unpredictable trade policies.
With global tensions calming, investors have turned their focus back to the U.S. economy and the Federal Reserve’s outlook on interest rates.
In May, the Fed’s preferred inflation gauge—the personal consumption expenditures (PCE) price index—rose 0.1% month-over-month, matching both expectations and April’s increase. On a yearly basis, PCE rose 2.3%, up slightly from April’s revised 2.2% figure.
Excluding volatile items like food and energy, the “core” PCE index rose 0.2% in May and 2.7% over the past year—both readings slightly higher than forecast.
“The slightly stronger core PCE number is mildly hawkish, especially compared to the softer consumer and producer price indexes earlier this month,” analysts at Vital Knowledge wrote. “Still, inflation trends aren’t shifting dramatically, and the Fed would probably be cutting rates by now if not for tariff concerns.”
Inflation remains a key factor as the Fed decides how to proceed with interest rate policy. So far, the central bank has taken a cautious “wait-and-see” stance, noting that they’re still assessing the full impact of Trump’s aggressive tariff measures.
Meanwhile, the U.S. economy shrank at an annual rate of 0.5% in the first quarter—its first contraction since 2022.
Nike Jumps After Strong Earnings
On the corporate front, Nike (NYSE: NKE) shares jumped after the company reported better-than-expected results for its fiscal fourth quarter. Nike said the financial impact from its ongoing restructuring efforts has likely bottomed out.
Executives also shared plans to move more manufacturing out of China and into the U.S. to reduce exposure to possible new tariffs.
Banking Sector Eyes Fed Stress Test Results
The banking sector is also in focus today, with the Federal Reserve set to release results from its annual stress tests for major banks. Analysts expect the results to show that most banks remain well-capitalized and able to handle a major economic downturn. This year’s stress tests are expected to be less intense than in previous years.
Oil Heads for Steep Weekly Loss
Crude oil prices inched higher Friday but remain on track for their sharpest weekly losses in over two years. The Israel-Iran ceasefire has reduced the geopolitical risk premium that had recently supported prices.
As of 9:32 a.m. ET, Brent crude was up 0.6% at $67.10 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 1% to $65.91. Both benchmarks are on pace to fall about 12% for the week—their steepest weekly drop since March 2023.