U.S. Stocks Finish Choppy Session Slightly Higher, Post Strong Weekly Gains

wallstreet sept20 28sep23 lt
Following the lackluster performance seen during Thursday’s session, stocks continued to experience choppy trading on Friday. The major averages spent the day bouncing back and forth across the unchanged line before closing slightly higher.

The S&P 500 edged up 5.78 points or 0.1 percent to 4,514.02, the Nasdaq inched up 11.81 points or 0.1 percent to 14,125.48 and the Dow crept up 1.81 points or less than a tenth of a percent to 34,947.28.

Despite the lackluster performance, the tech-heavy Nasdaq reached its best closing level in well over three months and the S&P 500 reached its best closing level in well over two months.

Reflecting strong gains earlier in the week, the Nasdaq surged by 2.4 percent for the week, while the S&P 500 and the Dow jumped by 2.2 percent and 1.9 percent, respectively.

The continued choppy trading on Wall Street came as traders seemed to be taking a moment to assess the recent strength in the markets.

Optimism about the outlook for interest rates has contributed to the recent advance, as the latest data has shown signs of easing inflation.

The data has reinforced investors’ expectations that the Federal Reserve will refrain from raising interest rates over the next several months before cutting rates in mid-2024.

The Fed’s next monetary policy meeting is scheduled for December 12-13, with CME Group’s FedWatch Tool currently indicating a 100.0 percent chance the central bank will leave rates unchanged.

However, some economists have suggested Fed officials will maintain a somewhat hawkish tone to avoid the appearance of declaring victory over inflation too soon.

In U.S. economic news, the Commerce Department released a report showing an unexpected increase in new residential construction in the month of October.

The report said housing starts jumped by 1.9 percent to an annual rate of 1.372 million in October after surging by 3.1 percent to a downwardly revised rate of 1.346 million in September.

Economists had expected housing starts to dip to a rate of 1.350 million from the 1.358 million originally reported for the previous month.

The Commerce Department said building permits also shot up by 1.1 percent to an annual rate of 1.487 million in October after plunging by 4.5 percent to a revised rate of 1.471 million in September.

Building permits, an indicator of future housing demand, were expected to decrease to a rate of 1.450 million from the 1.475 million originally reported for the previous month.

Sector News

While most of the major sectors showed only modest moves on the day, energy stocks saw significant strength amid a rebound by the price of crude oil.

With crude for December delivery spiking $2.99 to $75.89 a barrel, the NYSE Arca Oil Index surged by 2.3 percent and the Philadelphia Oil Service Index jumped by 2.2 percent.

Airline stocks also turned in a strong performance, driving the NYSE Arca Airline Index up by 2.2 percent to its best closing level in well over a month.

Networking and financial stocks also moved notably higher, while some weakness was visible among software and gold stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index rose by 0.5 percent, while Hong Kong’s Hang Seng Index plunged by 2.1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1.3 percent, the French CAC 40 Index advanced by 0.9 percent and the German DAX Index climbed by 0.8 percent.

In the bond market, treasuries showed a lack of direction over the course of the session before closing roughly flat. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.441 percent.

Looking Ahead

Next week’s trading may remain subdued due to the Thanksgiving Day holiday on Thursday, although reports on durable goods orders, existing home sales and weekly jobless claims may still attract attention along with the minutes of the latest Fed meeting.

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