Stocks rise as Apple tops $3tn mark, inflation eases

NEW YORK — Stocks jumped on Friday as Apple ended a session above $3 trillion in market value for the first time and data showed inflation cooling in the United States and Europe.

Friday's buoyant round of trading in New York concluded a winning quarter for US stocks amid greater hopes the US economy can avoid a recession and that the Federal Reserve (Fed) will soon end its interest rate hikes.

The S&P 500 piled on nearly 16 per cent in the first six months of 2023.

European markets, meanwhile, finished the first half of the year with similar gains, with Paris up 14 per cent and Frankfurt adding 16 per cent since January 1.

Apple shares rose 2.3 per cent, bringing the tech titan's market value back above $3 trillion. Apple had briefly breached the level in January 2022 during a trading session, but had closed below the benchmark.

The US inflation measure most closely watched by the Fed — the personal consumption expenditures — declined in May to 3.8 per cent year-on-year from 4.3 per cent in April, official data showed.

In Europe, figures showed that eurozone consumer prices rose 5.5 per cent in June, down from 6.1 per cent in May.

The Fed and the ECB have warned that more interest rate hikes are likely at their next meetings, but the latest inflation figures raised hopes that the central banks could soon wind down their monetary tightening.

"European stocks are ending the week on a high, buoyed by another encouraging inflation report that will soon support the end of the ECB's tightening cycle," said Craig Erlam, senior market analyst at the OANDA trading group.

The Fed kept its rate unchanged earlier this month after 10 straight increases, but chairman Jerome Powell warned this week that two more increases were probably necessary by the end of the year.

US Treasury bond yields eased following the latest inflation data.

"The inference, we suppose, is that this data point might not persuade the Fed from raising rates in July, but the disinflation trend could put a clamp on the willingness to raise rates again in September," said Briefing.com analyst Patrick O'Hare.

Strong US economic data this week, including an upgrade of first-quarter growth to 2 per cent, gave room for the Fed to maintain its hawkish stance for now.

ECB President Christine Lagarde has pledged another rate increase at the Frankfurt-based central bank's next meeting in July.

China worries 

In Hong Kong and Shanghai, traders trod with caution Friday after fresh data on China's economy showed further slowing, with factory activity contracting for the third straight month while growth in the services and construction industries slowed.

A string of similar data in recent months has fanned speculation that authorities will unveil measures to kickstart the economy.

But aside from some small interest rate cuts, officials have unveiled very little of substance to reassure investors, which has kept equities subdued.

China's Cabinet on Friday said it would "take effective measures to enhance the momentum of development, optimise the economic structure, and promote the sustained recovery of the economy... in a timely manner".