Global Stocks Dip as U.S. Business Activity Soars to 2-Year High

Global stocks dipped for the second session and the dollar reached its highest level since May as U.S. business activity hit a two-year high. While employment rebounded, easing price pressures raised optimism about cooling inflation. Major stock indices showed mixed results as the tech sector saw declines.

A gauge of global stocks dipped for a second straight session on Friday and the dollar hit its highest level since early May as a gauge of U.S. business activity edged up to a more than two-year high. S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, inched up to 54.6 this month, the highest since April 2022, from a 54.5 reading in May. A reading above 50 indicated expansion.

However, while a rebound in employment helped lift the reading, price pressures eased, adding to recent data that has boosted optimism inflation may be cooling. On Wall Street, the S&P 500 and Nasdaq were lower in the early stages of trading, weighed down by declines in the tech sector for a second day in a row as the furious rally in AI-related names shows signs of tiring after a run of several record closing highs in recent days.

The Dow Industrials advanced, boosted in part by gains in McDonald's shares. The Dow is on track for its biggest weekly percentage gain since mid-May while the S&P is on pace for its third straight weekly advance. The Nasdaq is poised to snap a two-week streak of gains. "The largest companies in the S&P 500 are excellent, very profitable and growing quickly ... but they are getting a little bit expensive," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

"We wouldn't be surprised if the market takes a breather and cools off a bit in the short term." The Dow Jones Industrial Average rose 75.22 points, or 0.19%, to 39,209.98, the S&P 500 lost 4.13 points, or 0.08%, to 5,468.86 and the Nasdaq Composite lost 12.22 points, or 0.07%, to 17,709.37.

MSCI's gauge of stocks across the globe fell 2.58 points, or 0.32%, to 801.77, falling further from the intraday record of 807.17 hit on Thursday although still on track for its third straight weekly advance. Other economic data on the housing market showed U.S. existing home sales fell for a third straight month in May as record high prices and a resurgence in mortgage rates kept potential buyers on the sidelines.

European stocks were also lower

, pulled lower by bank stocks and technology shares as economic data showed euro zone business growth slowed sharply this month. The STOXX 600 index fell 0.65%, while Europe's broad FTSEurofirst 300 index fell 13.29 points, or 0.65%.

U.S. Treasury yields inched higher after the data, with the yield on benchmark U.S. 10-year notes up 0.1 basis point to 4.255%. The 10-year yield is on track for its first weekly climb after two straight declines. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.15% at 105.79, with the euro down 0.09% at $1.0689. Sterling weakened 0.15% at $1.2636.

Against the Japanese yen, the dollar strengthened 0.21% at 159.23 after reaching 159.47, a level not seen since late April when Japanese authorities intervened to halt the rapid fall in the currency. Japanese data earlier on Friday indicated the country's demand-led inflation slowed in May, clouding the picture for a rate hike from the Bank of Japan.

BoJ deputy governor Shinichi Uchida said on Friday the central bank was willing to raise rates if the economy and prices move in line with its forecasts, but signs of weakness remained. The country's top currency diplomat, Masato Kanda, also said Japanese authorities are ready to take action against speculative and excessively volatile moves in the currency market that hurt the economy.

In commodities, U.S. crude gained 0.17% to $81.43 a barrel and Brent rose to $85.88 per barrel, up 0.2% on the day and were on course for a second straight weekly advance on signs of improving demand.