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By Geoffrey Smith
Investing.com — U.S. stock markets surged at the opening on Friday, as a fresh wave of optimism over economic reopening overcame fears of inflation and consequently a withdrawal of monetary stimulus.
Fears of the economy overheating against a backdrop of production bottlenecks and labor shortages appeared to recede after a series of Federal Reserve speakers in the course of the week reiterated that the rise in inflationary pressures - visible in surging commodity prices and April's consumer inflation report - will not last beyond the end of the year. April's retail sales data, which showed a clear cooling off of consumer spending on stuff (as opposed to services), bolstered confidence that recent developments are only quirks in a gradual return to normal consumer spending patterns.
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was up 217 points, or 0.6%, at 34,239 points. while the S&P 500 was up 0.8% and the Nasdaq Composite was up 1.0%.
Earlier. the Census Bureau had said that retail sales had stagnated in April, albeit the shortfall relative to expectations was offset by an upward revision to March data that had shown a splurge in spending as stimulus checks of up to $1,400 were distributed across the country. Economists said the slowdown was due largely to more spending being diverted to services and experiences, which are not covered by the retail sales statistics.
The CPI report and awareness of the rally in commodities has nonetheless had an impact on consumers already. the University of Michigan's consumer sentiment survey for May showed a rise in five-year inflation expectations to over 3% for the first time in over seven years.
One of the biggest gainers in early trade was a beneficiary of such spending, with DoorDash stock rising over 11.5% after the food delivery company reported a tripling of revenue in the quarter through March. The company also raised its guidance for the year.
However, two more heavily-weighted movers were heading in the other direction: Walt Disney (NYSE:DIS) stock fell 4.6% to its lowest in over three months after the entertainment giant said it added fewer new subscribers to its streaming service Disney+ than expected. Disney is set to be a beneficiary of reopening, which will allow movie theater tickets to rebound and its theme parks and cruise division to resume operations. However, such benefits are still largely in the future.
Additionally, Airbnb (NASDAQ:ABNB) stock fell, but then recovered to be up 1.0% after reporting a wider net loss and indicating that it may struggle to capitalize on the expected resurgence in tourism-related bookings this year due to a shortage of hosts.
Reopening sentiment has been boosted by the Centers for Disease Control recommending that vaccinated people need not wear masks in a variety of indoor environments from now on. Airline stocks reacted particularly strongly to that move, with American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL) and United Airlines (NASDAQ:UAL) stock all gaining between 3% and 4%.