US Stocks Advance on Friday as Inflation Shows Signs of Slowdown; Yields Drop

US equity benchmarks advanced on the final trading day of the week, with the Nasdaq Composite leading major indexes as the year-over-year rate in core PCE prices slowed. Markets will be closed on Monday due to the Memorial Day holiday.

The Dow Jones Industrial Average rose 1.8% to 33,212.96, the S&P 500 climbed 2.5% to 4,158.24, and the Nasdaq Composite was 3.3% higher at 12,131.13. Consumer discretionary and technology led gainers, with all the sectors in the green.

The US 10-year yield fell 1.5 basis points to 2.74%.

West Texas Intermediate crude oil futures were up $1.06 to $115.15 a barrel.

The Dow Jones Industrial Average rose 1% to 32,983 after midday Friday. The S&P 500 climbed 1.8% to 4,129.37, and the Nasdaq Composite was 2.6% higher at 12,046.62.

The highlights of Friday's data schedule were slower increases in the PCE price index, personal income, and current dollar personal spending in May, but an acceleration in real personal spending growth.

Personal consumption expenditures rose by 0.9% in April after a 1.4% surge in March, lifted by gains in both goods and services spending. Core PCE prices rose by 0.3% for a third straight month, as expected, slowing the year-over-year rate to a still-brisk 4.9% from 5.2% in the previous month.

Personal income was up 0.4% in April after larger gains in the previous two months, with transfer payments flat and wage and salary growth slower than in February and March.

In other economic news, the US Census Bureau released data Friday morning that showed the US advance international trade in goods deficit falling sharply to $105.9 billion in April from $125.9 billion in March. The report also said exports rose by 3.1% in April, while imports fell by 5%.

The Chicago Board of Options Exchange Market Volatility Index, or VIX, a measure of implied volatility based on the prices of a basket of S&P 500 Index options with 30 days to expiration, declined 6.5% to 25.72.

In company news, Twitter TWTR decided to retain Egon Durban on its board despite the director not receiving sufficient votes for re-election, according to a regulatory filing. Separately, Tesla TSLA Chief Executive Elon Musk is under a probe by the US Securities and Exchange Commission over his disclosure of a minority stake in Twitter last month, Reuters reported, citing a letter the parties received in April.

Ulta Beauty ULTA was the top gainer on the S&P 500, with shares rising by 12.5%, a day after the company posted higher fiscal Q1 financial results and raised its full-year outlook. Autodesk ADSK shares were more than 10% higher, the second-biggest gainer on the S&P 500, after the company reported fiscal Q1 non-GAAP earnings late Thursday of $1.43 per diluted share, up from $1.03 per share a year earlier.

Gold was $3.50 higher at $1,857.40 per troy ounce and silver rose $0.17 to $22.13 per ounce. Among energy ETFs, the United States Oil Fund was up 1% to $85.46, and the United States Natural Gas Fund declined 0.5% to $29.58.