Dow closes at record high above 40,000 to cinch a five-week winning streak

The Dow Jones Industrial Average rose to another record close on Friday afternoon.

The 30-stock index rose 134.21 points, or 0.34%, to settle at 40,003.59. The benchmark had first crossed over the 40,000 mark for the first time on Thursday morning.

The S&P 500 also added 0.12% to close at 5,303.27. On the other hand, the Nasdaq Composite shed 0.07%, finishing at 16,685.97.

— Lisa Kailai Han

Here’s where the major averages stand going into market close on Friday afternoon:

— Lisa Kailai Han

Inflation is not fading as a cause of concern at either the Federal Reserve or the public at large, but among American corporations, inflation is going quietly into that good night.

The number of S&P 500 companies mentioning inflation on their quarterly earnings calls with shareholders and analysts peaked in the first quarter (410) and second quarter (412) of 2022, just as the Fed began hiking interest rates from near zero, but since then has fallen for seven consecutive quarters, according to a study from FactSet senior earnings analyst John Butters released Friday.

Scanning conference calls transcripts from March 15 to May 17 for the use of “inflation” yielded 219 companies, FactSet said. Still, even those 219 companies is above the 10-year average of 180 companies. But while about 30 companies in the S&P 500 have yet to report first-quarter results, the total still will not exceed the fourth quarter of 2023’s total of 285, FactSet said.

Management teams at only 24 companies mentioned inflation 10 or more times on their latest earnings calls, led by Darden Restaurants (23) and General Mills (21), Butters’ report said. Consumer staples companies (86%) and financials (72%) mentioned inflation the most.

— Scott Schnipper

Softer economic data in recent weeks bolsters the argument that investors may finally receive some much-anticipated rate cuts in 2024, UBS argued in a Friday note.

“We continue to believe recent economic data underpin our view that a return of disinflation should allow the Fed to start easing policy later this year,” the bank wrote.

UBS added that price pressures have also been easing in recent months in categories such as shelter, which should help bring down overall inflation.

— Lisa Kailai Han

Boot Barn continues to catch analysts’ attention for its focus on a hot fashion category: Western.

UBS analyst Jay Sole, who has a buy rating, told clients the retailer’s stock could run up around 25%. Part of his bullish thesis is tied to the company’s focus on American Western and workwear styles, which are currently on trend.

“BOOT is the dominant retailer in two niche and underserved categories,” he told clients. Additionally, Sole cited the company’s expansion plans as reason to anticipate strong sales and earnings beats in the future.

Sole is not the only one taking note of the Western trend. Click the links below for more of CNBC’s coverage on how Western’s revival is shaking up purchasing patterns and certain stocks:

— Alex Harring

These are some of the stocks making the biggest midday moves:

GameStop — Shares tumbled 25% after the video game retailer said it plans to sell up to 45 million class A common shares in an at-the-market offering. The sale comes after GameStop shares surged earlier this week in a short-lived resurgence of the meme-stock trade.

Reddit — The social media stock popped 12% after Reddit announced a partnership with OpenAI. 

Doximity — The online networking platform soared 18% on strong earnings and a share repurchase announcement.

See the full list here.

— Alex Harring

Stocks have rallied to record highs recently, but Wells Fargo is expecting this trend to turn on its head.

Analyst Christopher Harvey pointed out that the “bad news = good news” narrative has pushed the major stock indexes to new records. However, he believes the market is unlikely to continue pushing higher consistently, at least for now.

“Expect near-term choppiness with a late-year rally toward our SPX 5535 target,” he wrote.

Harvey’s year-end S&P 500 target represents a 4.5% move upward for the benchmark.

— Lisa Kailai Han

Federal Reserve Chair Jerome Powell has contracted Covid-19 again and will not be attending the Georgetown Law School graduation where he is scheduled to deliver the commencement address this weekend, a Fed spokesperson said.

The central bank leader “tested positive for Covid-19 late yesterday and is experiencing symptoms,” the spokesperson said in a statement. “Following Centers for Disease Control and Prevention guidance, he is staying away from others and working at home.”

Powell had been slated to deliver the address Sunday, but instead will do so via prerecorded video.

This is the second time Powell has contracted Covid, the first coming in January 2023.

— Jeff Cox

Twenty-five stocks in the S&P 500 hit new 52-week highs during Friday’s trading session.

Names that hit this milestone include:

On the other hand, Caesars Entertainment hit a 52-week low.

— Lisa Kailai Han, Christopher Hayes

Strong economic growth combined with waning inflation should provide the perfect setup for large-cap stocks to continue rallying, according to Tom Hainlin, senior investment strategist at U.S. Bank Asset Management.

Within large-cap stocks, Hainlin believes the market rally is set to broaden beyond megacap tech names and has now included stocks from the financials, materials, industrials and energy sectors.

On the other hand, the strategist noted that small-cap stocks do not benefit from higher rates for longer like their larger counterparts do, and would not recommend aggressively pursuing the asset class.

— Lisa Kailai Han

JPMorgan will kick off next week with an investor day that should highlight strength across the bank’s business lines, according to Bank of America.

“During Monday’s investor day the Street will be paying close attention to whether JPM can maintain this superior profitability (net interest margin defensibility, fee revenue growth, capital leverage, productivity gains). We believe it can,” analyst Ebrahim Poonawala wrote in a note to clients.

How JPMorgan plans to spend in the coming year could be a key topic at the Investor Day, according to Poonawala. That could include deploying excess capital for acquisitions and spending money on internal projects related to artificial intelligence.

Bank of America has a buy rating on JPMorgan, with a price target of $220 per share. That is more than 8% above where the stock closed Thursday.

— Jesse Pound

Inflows for U.S. equities rose $12.35 billion the past week, marking the biggest inflow in seven weeks, according to Bank of America. 

Global emerging market bonds also recorded positive inflows of $0.34 billion in the period, up from negative flows of $0.73 billion, per the bank. 

Meanwhile, inflows for U.S. high-grade bond funds and exchange-traded funds moderated to $10.8 billion, lower from $3.15 billion from the prior week. The firm defines “high-grade” flows as a mix of “bond” and “corporate bond” fixed income funds and ETFs domiciled in the U.S.

— Hakyung Kim

Check out the companies making headlines before the bell:

• GameStop — Shares dropped more than 20% after the video game retailer said it plans to sell 45 million common shares of its stock. It also posted preliminary results that showed a sales decline in the first quarter.
• Reddit — The social media company rallied 10.5% after announcing a partnership with OpenAI. Under the deal, Reddit will gain certain artificial intelligence features powered by OpenAI, while the ChatGPT maker will gain access to Reddit’s Data application programming interface to train its AI models.
• Take-Two Interactive Software — Shares of the video game company were down more than 2% after an update about the timing of the new Grand Theft Auto game. Take-Two says the game will now come out in the fall of 2025. Previous guidance called for sometime in the 2025 year.

Read the full list here.

— Sarah Min

Even though the energy sector has mostly completely its post-Covid-19 pandemic recovery, oil demand is due to grow at a rate above its historical average, according to Morgan Stanley.

“The year 2024 is arguably the first ‘normal’ year in a while in which oil demand is mostly reflecting slower-moving drivers, such as economic growth, population expansion, government policies and technological change,” analyst Martijn Rats wrote. “What we are finding is this: not only is oil demand continuing to grow, but it is doing so at a rate above the historical trend rate. Given the focus on ‘peak oil demand’ in recent years, this is actually somewhat of a surprise.”

The analyst added that investments across the board in the energy sector have been rising, including in the development of new oil and gas fields and within wind and solar. Altogether, this suggests strong demand for energy current persists, regardless of its form.

— Lisa Kailai Han

An economic soft landing is still the most likely scenario to materialize, according to Morgan Stanley.

However, in a recent note, the bank’s Chief Investment Officer Lisa Shalett clarified that the odds of an economic soft landing happening have gone down to 50% from 80%. The bank still expects three rate cuts this year, with the first due in September.

As for positioning, Morgan Stanley remains market weight global equities. The bank’s price target for the S&P 500 this year is currently at 4,500, representing a 15% downside.

Shalett’s best ideas currently lay within Japan, real assets and infrastructure investments, she wrote.

“Outside the US, we prefer Japan based on improving growth and inflation dynamics there and the very inexpensive yen. We continue to also look for stock-specific opportunities in Europe and beta opportunities in select EMs like India, Brazil, and Mexico,” she added.

— Lisa Kailai Han

Shares of video game company Take-Two Interactive were under pressure Friday morning after an update about the timing of one of its premier franchises.

Take-Two says the next Grand Theft Auto is now scheduled for the fall of 2025. Previous guidance just called for sometime during the calendar year.

Take-Two’s fiscal year begins in April, so the timing has a big effect on its outlook. The company said it expects between $5.55 billion and $5.65 billion in net bookings for this fiscal year. Analysts surveyed by LSEG were expecting $6.94 billion.

The company’s fiscal fourth-quarter bookings of $1.35 billion did top expectations of $1.30 billion, according to analysts surveyed by LSEG.

The stock was down more than 2% ahead of the opening bell.

— Jesse Pound

Reddit surged 13% after announcing a deal with OpenAI in which the ChatGPT parent can use data from the social media platform to train its large language model.

“Including it in ChatGPT upholds our belief in a connected internet, helps people find more or what they’re looking for, and helps new audiences find community on Reddit,” Reddit CEO Steve Huffman said in a release Thursday.

— Fred Imbert