The Dow Jones Industrial Average eked out an eighth-straight gain Friday, while the blue chip index and the S&P 500 remain within striking distance of fresh all-time highs as Sino-American trade tensions ease and central banks support risk taking with economic stimulus measures.
How did the major benchmarks perform?
The Dow Jones Industrial Average DJIA, +0.14% rose 37.07 points, or 0.1%, at 27,219.52, but the S&P 500 SPX, -0.07% fell 2.18 points, or 0.1%, to 3,007.39, and the Nasdaq Composite Index COMP, -0.22% retreated 17.75 points, or 0.2%.
For the week, the Dow rose 1.6%, the S&P 500 added 1% and the Nasdaq advanced 0.9%
Friday’s action left the Dow 0.5% from its record at 27,359.16 hit on July 15, while the S&P 500 was also 0.5% from its all-time high at 3,025.86 set on July 26. The Nasdaq ended the day 1.9% from its all-time closing high at 8,330.21 also hit on July 26.
What drove the market?
Retail sales grew faster than expected in August, up 0.4%, and were up 4.1% year-on-year, the U.S. Commerce Department said on Friday. The rise was driven entirely by purchases of new cars and trucks though, as retail sales ex-autos were flat. Strong demand for big-ticket items like automobiles suggests the U.S. consumer remains confident about his future prospects.
“This morning’s number was above expectations but more importantly it’s the sixth straight month of positive growth for retail sales which is a really encouraging,” wrote Mike Loewengart, vice president of investment strategy at E-Trade Financial in an email. “With holiday spending on the horizon and inflation at bay, we could continue to see momentum in the retail sector. A healthy consumer can help inject some energy into other sectors of the economy.”
“That said, trade tensions are a key focal point and rising tariffs between the US and China could threaten this critical indicator, Loewengart added.
Softening trade tensions between the U.S. and China, with the hope of formal negotiations restarting early next month, and easy-money policies being undertaken by global central banks have all helped to momentarily quell many investors’s fears that a near-term recession will grip the U.S. economy. Beijing made further concessions to the U.S. on international trade on Friday, adding agricultural products like soybeans and pork to the list of imports exempted tariffs.
On Thursday, the European Central Bank on Thursday cut its deposit rate from -0.4% to -0.5%, while announcing it would restart open-ended purchasing of long-term government bonds at a pace of €20 billion a month in an effort to further reduce long-term interest rates.
The Federal Reserve will deliver its monetary policy statement, with further rate cuts widely expected, on Sept. 18.
Thus far, stability, if not outright strength, in the economy has been part of the recipe for rising market prices and bond yields, reflecting a reduction in anxiety about the outlook. Indeed, gains for equities have come as the 2-year Treasury note TMUBMUSD02Y, +0.00% saw its sharpest weekly yield rise since 2009 and the 10-year Treasury TMUBMUSD10Y, +0.00% had its largest weekly climb in rates since 2013, according to Dow Jones Market Data.
U.S. consumers grew more confident in September, according to the University of Michigan’s consumer sentiment index, which came in a 92.0 versus the August reading of 89.8.
Which stocks were in focus?
Shares of Broadcom Inc. AVGO, -3.41% fell 3.4% after the chip maker announced fiscal third-quarter earnings late Thursday that beat analyst expectations, though its outlook for the annual revenue was below what Wall Street expected.
Apple AAPL, -1.94% fell 1.9% after Goldman Sachs lowered its price target on the grounds that the company’s recently announced TV+ trial period would impact margins. Shares fell Friday.
How did other markets trade?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +0.00% extended its weekly gain on Friday, adding 11 basis points to 1.894% from 1.789% late Thursday. This week saw the biggest bond market sell off in several years.
In commodity markets, the price of crude oil CLV19, -0.05% fell 0.3% to $54.94 a barrel on the New York Mercantile Exchange, while gold prices GCZ19, -0.25% fell 0.8% to $1,495 an ounce. The U.S. dollar DXY, -0.46%, meanwhile, slumped 0.1% lower relative to a basket of leading rivals, extending its weekly loss of 0.2%.
In Asia overnight Thursday, Hong Kong’s Hang Seng Index HSI, +0.98% gained 1% and Japan’s Nikkei 225 NIK, +1.05% rose 1.1%. European shares edged mostly higher Friday, with the Stoxx Europe 600 SXXP, +0.34 closing 0.3% higher.