Stocks Fight For Fifth Day Of Gains, Dollar Rebounds As Inflation Fears Go Haywire: What's Driving Markets Friday?

Wall Street fought for a fifth consecutive day of gains on Friday, with major indexes edging slightly higher by midday in New York as investors continued to digest the week's significant trade breakthroughs and recalibrate their economic expectations.

The S&P 500 rose 0.1% to 5,925, its highest level since early March, while the Nasdaq 100 held firm after a strong prior session. Gains were broad but cautious as markets balanced optimism over de-escalating tariffs with growing macro concerns.

Healthcare stocks rebounded from recent underperformance, buoyed by a rally in Eli Lilly & Co. (NYSE:LLY), while the energy sector lagged as crude prices cooled.

The U.S. dollar surged after the University of Michigan's consumer sentiment report delivered one of the bleakest stagflationary signals in recent decades.

The headline Consumer Sentiment Index dropped to its lowest level since June 2020, while the Consumer Expectations subindex hit levels not seen since 1980. Year-ahead inflation expectations soared to 7.3%, the highest since late 1981.

The spike in inflation fears rattled rate-cut bets. Fed funds futures slashed the odds of a June interest rate cut to just 5%, effectively pricing out any move next month.

Markets now fully price the first rate cut only by October 2025, with a second possibly arriving in December.

Treasury yields rose as bond prices fell, with the 30-year yield rising back to 4.90%, following the dismal sentiment data. The combination of rising yields and a stronger dollar weighed heavily on gold, which dropped 1.8% and is headed for its worst weekly performance since November 2024.

In crypto, Bitcoin (CRYPTO: BTC) bounced back and reclaimed the $104,500 level.

Friday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust (NYSE:SPY) inched 0.2% up to $591.88.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) rose 0.2% to $424.32.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) edged 0.1% up $520.03.
• The iShares Russell 2000 ETF (NYSE:IWM) rose 0.4% to $209.16.
• The Health Care Select Sector SPDR Fund (NYSE:XLV) outperformed, up 1%; the Energy Select Sector SPDR Fund (NYSE:XLE) lagged, down 0.5%.

Friday’s Stock Movers

• Applied Materials inc. (NASDAQ:AMAT) fell 6.1% following a miss in revenue forecasts and revised guidance amid trade challenges with China.
• Take-Two Interactive Software inc. (NASDAQ:TTWO) fell 2% after missing earnings expectations last quarter.

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