The Dow and S&P 500 ended higher on Friday and the Dow registered its biggest daily percentage gain since November 2023 as month-end repositioning drove a late sharp rally, with all three major U.S. indexes posting strong gains for May. Canada’s main stock index also rallied into the close, adding to its monthly gain, as domestic economic data boosted prospects of the Bank of Canada beginning interest rate cuts and investors rotated into more defensive areas of the market.
Almost all of the major S&P 500 sectors ended higher, with the energy sector up 2.5%. The technology sector closed slightly in the red.
“We definitely saw a spike in volume toward the end,” said Joe Saluzzi, co-founder and co-head of Equity Trading at Themis Trading in Chatham, New Jersey, noting it was probably related to month-end repositioning.
Volume on U.S. exchanges totaled 14.60 billion shares, compared with the 12.56 billion average for the full session over the last 20 trading days.
The U.S. personal consumption expenditures (PCE) price index increased 0.3% last month, the Commerce Department’s Bureau of Economic Analysis reported, matching the unrevised gain in March. It also showed consumer spending slowed more than expected.
“People were pleased that it wasn’t hotly surprising but also underneath the surface, the consumer continues to show a little bit of strain,” said Carol Schleif, chief investment officer at the BMO family office in Minneapolis.
Traders of futures tied to the Fed policy rate added to bets of roughly even odds that the central bank will begin to cut rates in September and boosted the chances of a second rate cut in December to about the same probability.
On Friday, the Dow Jones Industrial Average rose 574.84 points, or 1.51%, to 38,686.32. The S&P 500 gained 42.03 points, or 0.80%, at 5,277.51 and the Nasdaq Composite lost 2.06 points, or 0.01%, at 16,735.02.
For the month, the S&P 500 rose about 4.8%, the Nasdaq jumped 6.9% and the Dow climbed 2.4%.
Stocks were down for the week, however, with the S&P 500 and Nasdaq breaking five-week winning streaks. For the week, the S&P 500 fell about 0.5%, the Nasdaq declined 1.1% and the Dow fell 0.9%.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 197.41 points, or 0.89%, at 22,269.12.
For the month of May, the TSX was up 2.55%. It posted a record closing high of 22,468.16 on May 21.
“I wouldn’t be surprised to see more consolidation just given the magnitude of the strength that we’ve seen across many sectors and many areas,” said Sid Mokhtari, chief market technician for CIBC Capital Markets. “We are seeing some rotation out of technology ... We’re seeing some of it being pulled back into industrials, some of the staples, areas where they can be perceived as defensive.”
The TSX industrials group added 1.55% and consumer staples ended 0.89% higher. Energy was up 1.21% even as the price of oil settled 1.2% lower at $76.99 a barrel ahead of an OPEC+ meeting on Sunday.
Money markets are pricing in an 80% chance that the BoC begins an easing campaign at a policy announcement next Wednesday after data showed the Canadian economy expanding at a slower-than-expected annualized pace of 1.7% in the first quarter.
The materials group, which includes metal miners and fertilizer companies, ended 0.58% lower as gold and copper prices fell.
Investment industry participants in Canada have successfully transitioned to a shorter securities settlement standard, the Canadian Capital Markets Association said in a statement.
In Toronto stock moves, Laurentian Bank of Canada reported a loss for the second quarter, sending its shares down 6.52%.
In the U.S., shares of Dell fell 17.9% after it forecast current-quarter profit below market estimates and signaled that higher costs to build servers that meet heavy AI workloads would dent its annual margins.
Among gainers, Zscaler jumped 8.5% after the security solutions provider forecast fourth-quarter results above estimates.
Gap surged 28.6% after the apparel maker raised its annual sales forecast and its first-quarter results beat market expectations, in fresh signs that its turnaround strategy was starting to work.
Trump Media & Technology Group fell 5.3% after a New York jury convicted former President Donald Trump of falsifying documents to cover up a hush money payment to a porn star ahead of the 2016 elections.
Advancing issues outnumbered decliners by a 2.94-to-1 ratio on the NYSE and a 1.51-to-1 ratio on the Nasdaq. The S&P 500 posted 19 new 52-week highs and six new lows while the Nasdaq Composite recorded 55 new highs and 100 new lows.
Reuters, Globe staff
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