Stocks rebound while dollar falls after US data

MSCI's global equities index staged an afternoon rebound on Friday as investors repositioned for month-end, while the dollar fell with Treasury yields as data showed a modest rise in US inflation in April.

After spending most of the session in the red, the MSCI All Country World Price Index turned positive ahead of a rebalance of the index. When Wall Street trading ended, the global index was up 0.57 per cent at 785.54 after falling as low as 776.86 earlier, reports Reuters.

"When you get an upside reversal it's always a good sign if you're bullish," said Joe Saluzzi, head of Equity Market Structure Research and co-head of equity trading at Themis Trading. He cited month-end portfolio adjustments for the late session buying.

Before the market opened on Friday, the US Commerce Department said the personal consumption expenditures (PCE) price index, widely seen as the Federal Reserve's favoured inflation indicator, increased 0.3 per cent last month, in line with expectations and the March increase, while core PCE rose 0.2 per cent, compared with 0.3 per cent in March.

While some strategists said they were relieved inflation wasn't hotter than expected, Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut said the data didn't change much in terms of interest-rate expectations.

"The core PCE this morning didn't really do anything ... It was just a status quo type of report so there is no indication that the Federal Reserve is going to be on hold longer, or going to cut rates sooner."

Separately, the Chicago Purchasing Managers Index (PMI), which monitors the health of manufacturing in the Chicago region, fell to 35.4 from 37.9 last month and was well below economist expectations of 41.

For the week, the MSCI index was showing its second consecutive decline but a monthly gain.