U.S. stocks extended recent gains, finishing Friday’s trading session higher amid some mixed results from Deere & Company and an upbeat report from Nordstrom and as afternoon reports indicated that Chinese leader Xi and U.S.
Technology stocks underperformed their peers as chip companies NVIDIA and Applied Materials announced some disappointing guidance.
Treasury yields dipped and the U.S. dollar traded lower, while gold and crude oil prices were higher.
The Dow Jones Industrial Average (DJIA) advanced 111 points (0.4%) to 25,669
The S&P 500 Index gained 9 points (0.3%) to 2,850
The Nasdaq Composite was 10 points (0.1%) higher at 7,816
In moderate volume, 763 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq
WTI crude oil increased $0.45 to $65.91 per barrel and wholesale gasoline lost $0.01 to $1.98 per gallon
The Bloomberg gold spot price added $9.56 to $1,183.72 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% lower at 96.12
Markets were mixed for the week, as the DJIA increased 1.4%, the S&P 500 Index ticked 0.6% higher, and the Nasdaq Composite decreased 0.3%
Leading Indicators tops forecasts but consumer sentiment surprisingly slides to 11-month low
The Conference Board’s Index of Leading Economic Indicators (LEI) for July rose 0.6% month-over-month, above the Bloomberg projection of a 0.4% gain and June’s unrevised 0.5% increase. The index has not seen a decline since May 2016. ISM new orders, the yield curve, the credit index, stock prices and consumer expectations were positive, while building permits were negative.
Treasuries ticked mostly higher, with the yields on the 2-year note and the 30-year bond dipping 1 basis point to 2.61% and 3.02%, respectively, while the yield on the 10-year note was flat at 2.86%.
The August preliminary University of Michigan Consumer Sentiment Index unexpectedly declined to an 11-month low of 95.3, compared to expectations for a slight rise to 98.0 from July’s final read of 97.9. The current economic conditions component of the survey fell, more than offsetting the expectations measure that held steady. The 1-year inflation forecast remained at 2.9%, while the 5-10 year inflation forecast ticked higher to 2.5% from the previous 2.4% rate.
Europe lower after yesterday’s gain, Asia mostly higher to close out the week
European equities finished mostly lower, with the markets appearing to pause and reflect on a choppy week that saw weakness followed by yesterday’s gain. Trade optimism fueled yesterday’s advance as China and the U.S. looked poised to restart stalled trade talks, but festering concerns regarding the Turkish economic/currency turmoil continued to keep conviction in check and bog down the financial sector.
Also, some disappointing guidance from the semiconductor sector in the U.S. today seemed to add to the market skittishness and weigh on the technology sector. However, stocks came off the worst levels of the session late in the day, mirroring the action in the U.S. As market choppiness lingers.
Stocks in Asia finished mostly to the upside, following the solid gains in the U.S. and Europe yesterday, with China’s announcement that it plans to resume trade talks with the U.S. later this month fostering optimism and cooling concerns.
France’s CAC-40 Index and Spain’s IBEX 35 Index dipped 0.1%, Germany’s DAX Index declined 0.2%,, and Italy’s FTSE MIB Index fell 0.5%, while the U.K. FTSE 100 Index finished little changed and Switzerland’s Swiss Market Index ticked 0.1% higher.
Lingering Chinese economic concerns and recently flared-up uneasiness toward emerging markets fostered some mixed action in China. Japanese equities advanced, with the yen holding steady during the session, and South Korean shares also gained ground. Australian securities traded higher and Indian stocks advanced. Equities trading in both mainland China and Hong Kong finished to the upside.
Stocks mixed as data flies, trade optimism resurfaces, and Turkish turmoil escalates
U.S. stocks diverged in a choppy week that saw a host of economic and earnings reports paint a mixed picture. China’s announcement that it plans to resume stalled talks with the U.S. cooled trade concerns, though escalated Turkish turmoil hamstrung conviction and pressured Europe and emerging markets. Energy stocks fell as crude oil prices continued to slide, exacerbated by a surprising jump in oil inventories, while the tech sector saw some renewed pressure on earnings reports from the group.
The markets appeared to have a defensive tilt as telecom, consumer staples, and utilities moved noticeably to the upside to help the S&P 500 eke out a slight gain. The U.S. dollar retreated a bit after hitting a 14-month high earlier in the week. Treasury yields were also subdued, with stronger-than-expected reads on retail sales, small business optimism, productivity, and Leading Indicators being met with softer-than-expected releases of industrial production, the Philly Fed Manufacturing Index, and consumer sentiment.
The Dow registered a solid gain, aided by strength in industrials as trade optimism nudged higher and Walmart Inc. jumped sharply on its blowout earnings report. However, consumer discretionary stocks posted a red figure as Walmart’s rally was countered by heavy scrutiny of earnings results from Dow member Home Depot Inc., Macy’s Inc., and J.C. Penney Company Inc.
U.S. stock indexes have moved within striking distance of record highs on quiet summer trading. However, we see some signs below the surface that risks are rising and the potential for more volatility and pullbacks is growing. Earnings season was stellar but the risk is that the expectations bar is getting set too high. Economic growth continues to be solid, but the rate of improvement may be leveling off, while trade/tariff concerns and the Fed inject more uncertainty for investors. The Fed has expressed little concern, but financial conditions have gotten tighter this year, which has implications for markets.
Next week, as the retail sector continues to put the finishing touch on another solid earnings season, the economic calendar will bring key reads on last month’s existing and new home sales, Markit’s preliminary August business activity reports and July preliminary durable goods orders. However, the Fed will likely command the most attention, with the release of the minutes from its most recent monetary policy meeting, which included an upgraded economic assessment to set the stage for a September rate hike.
Close attention could be paid to the Fed’s Annual Central Banking Symposium in Jackson Hole, Wyoming, which will culminate with Chairman Jerome Powell’s remarks on Friday. The markets will likely be looking to see if the recent uptick in global uncertainty has had any impact on the Central Bank’s appetite to continue steadily hiking rates.