Global stocks finish at record highs, oil climbs for 5th week

The Dow Jones Industrial Average rose 0.71 percent to end at 34,438.58 points, while the S&P 500 gained 0.34 percent. The Nasdaq Composite dropped 0.06 percent after holding near the previous session's record high.

MSCI's gauge of stocks across the globe closed at a record high of 721.91.

The pan-European STOXX 600 rose 0.13 percent, ending the week with gains of 1 percent following sharp swings on concerns of higher inflation hitting real income and leading central banks to raise interest rates.

Britain's FTSE 100 index was up 0.37 percent and Germany's DAX edged up 0.12 percent.

The latest US personal consumption expenditures (PCE) data showed a measure of underlying inflation rose less than expected in May. Core PCE rose 3.4 percent year-over-year, above the Fed's 2 percent flexible target.

"Economic data released this morning was mixed, but important readings in inflation were either in line with or slightly below expectations," Paul Hickey of Bespoke Investment Group, LLC said in a note.

Views on the inflation outlook remained mixed.

"Today's inflation data was another vote of confidence for the inflation is transitory camp," said Edward Moya, a senior market analyst with OANDA.

US inflation will remain elevated for two to four years, and only a market crash will prevent central banks from tightening in the next six months, BofA top strategist Michael Hartnett said in a note.

A build-up of financial stability risks linked to a low-interest rate environment could lead to another downturn that interrupts the labour market recovery and impedes a return to maximum employment, Boston Federal Reserve Bank President Eric Rosengren said on Friday.

Yields for benchmark 10-year US Treasuries, jumped back above 1.50 percent to close out a week in which yields notched their largest gains since March.

Germany's 10-year yield, the benchmark for the euro area, edged up to -0.156 percent.

Emerging market stocks rose 0.89 percent. MSCI's broadest index of Asia-Pacific shares outside Japan ended about 1 percent higher, while Japan's Nikkei rose 0.66 percent.

Monetary and fiscal stimulus around the world in response to the COVID-19 pandemic is boosting financial assets, despite an uneven pace of recovery between regions, said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management.

"Bonds go up, equity goes up, commodities go up - that is very much a liquidity-driven market," Cheng said.

Sebastien Galy, a senior macro strategist at Nordea Asset Management, said the US infrastructure spending plan was "likely big enough for the economy without overheating it unnecessarily," adding in a note that it meant "growth expectations improve somewhat."

Oil prices rose for a fifth week after climbing to their highest since October 2018, on expectations demand growth will outstrip supply and OPEC+ will be cautious in returning more crude to the market from August.

Brent futures rose 62 cents, or 0.8 percent, to settle at $76.18 a barrel, while US West Texas Intermediate (WTI) crude rose 75 cents, or 1.0 percent, to $74.05.

The US dollar eased against a basket of other currencies, in choppy trading.

The Japanese yen strengthened 0.09 percent versus the greenback and the euro was up 0.07 percent.

Mexico's peso extended gains after a surprise interest rate hike, while Latin American currencies were set to outpace their emerging market peers this week on hawkish central bank signals.

Sterling traded at $1.3885, down 0.27 percent on the day and on track for its worst month versus the dollar since September, after the Bank of England kept the size of its stimulus program unchanged and left its benchmark interest rate at an all-time low of 0.1 percent on Thursday.

Spot gold added 0.3 percent to $1,779.74 an ounce. US gold futures gained 0.61 percent to $1,776.60 an ounce.