S&P Advances To End Week At Record As Fed Signals No Rush To Normalize Policy

The S&P 500 (SPX) ended the week at a record high and all three major averages saw gains for the week. The rebound was definitely fueled by a major advance in the most heavily-weighted tech names, while energy names provided a bit of a drag as oil sold off amid some disappointment in the markets that the deal to extend the duration of OPEC's supply cut agreement didn't also come with a deepening of the cut levels. Along with tech's bounce, the Fed helped pave the way for the rally, as the minutes from the central bank's May meeting were interpreted as dovish and signaling a gradual pace in normalizing monetary policy.

MACRO NEWS: In the U.S., the Commerce Department revised U.S. gross domestic product growth to a 1.2% gain in the first quarter from the initially reported 0.7%. Analysts had forecast a smaller bump up to a 0.9% annualized growth rate. The second estimate of Q1 personal consumption growth was raised to 0.6% from the prior 0.3% growth estimate. Durable goods orders for April fell 0.7%, versus expectations for a decline of 1.5%. The final May reading from the University of Michigan consumer sentiment survey inched up to 97.1 from the 97.0 in April, though it was down from the 97.7 preliminary May reading. The FHFA home price index rose 0.6% to 246.2 in March. Existing home sales fell 2.3% in April to a 5.57M home rate, which was a bit worse than expected. Markit's flash composite PMI for May rose to 53.9 from 52.7 in April. The manufacturing and services PMIs were 52.5 and 54.0, respectively, for the preliminary reads, versus April's 52.8 and 53.1. New home sales dropped 11.4% to a 569,000 rate in April, which was a larger than expected decline...

In Fed news, minutes from the last Federal Reserve meeting read that most Fed members see the removal of some policy accommodation "soon" and that asset valuation pressure in certain markets were "notable." In addition, the minutes showed that the Fed is discussing a proposed plan for reducing the system's securities holdings in a "gradual and predictable manner"... In Europe, the Eurozone flash manufacturing PMI came in at 57, which was ahead of the consensus 56.5 forecast, while the services flash was 56.2, a bit below 56.4 forecast. The German Ifo institute's business climate index rose to 114.6 in May from 113 in April, beating expectations... In Asia, Japan's flash manufacturing PMI for May slipped to 52 from 52.7 in April.

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