Friday's session was range-bound throughout with the major U.S. indices trending sideways at their unchanged marks from start to finish. The S&P 500 (unch) and the Nasdaq (+0.1%) eked out their seventh-consecutive wins while the Dow (unch) finished three points below its flat line. For the week, the S&P 500 added 1.4%.
Sector movement was modest with ten of the eleven groups settling within 0.3% of their unchanged marks. The consumer staples sector (+0.3%) finished ahead of the broader market, thanks in part to Costco's (COST 177.86, +3.13) positive performance; the company added 1.8% after reporting better than expected earnings and revenues. The consumer discretionary (+0.3%) and materials (+0.3%) spaces also outperformed.
The energy sector (+0.1%) finished slightly higher with crude oil climbing 1.8% to $49.78/bbl, which was an encouraging sign in light of yesterday's tumble. On Thursday, WTI crude dropped 4.8% after OPEC and non-OPEC nations agreed to maintain their current production levels for nine months, but stopped short of cutting production once again. For the week, WTI crude lost 1.1%.
Similarly, the top-weighted technology space (unch) registered a slim gain. Chipmakers underpinned the sector, evidenced by the 0.4% increase the PHLX Semiconductor Index. Marvell (MRVL 17.67, +0.73) led the semiconductor advance, jumping 4.3%, after reporting better than expected earnings/revenues and issuing upbeat guidance.
On the flip side, the real estate group posted a notable loss, slipping 0.7%, but the other laggards finished just a step below their flat lines. The health care space (-0.2%) showed relative weakness as biotech names weighed; the iShares Nasdaq Biotechnology ETF (IBB 288.22, -2.30) lost 0.8%. Incyte (INCY 134.38, -4.03) was the weakest biotech name, dropping 2.9%.
Today's participation was a bit light ahead of the extended holiday weekend; 682.8 million shares changed hands at the NYSE floor (50-day simple moving average: 1.1 billion).
Outside of the equity market, the U.S. dollar added 1.0% against the British pound (1.2813) following a UK pre-election poll, which suggested that the Labour party has gained some ground on the Conservative party ahead of the country's snap election on June 8. U.S. Treasuries ended Friday's session slightly higher with the benchmark 10-yr yield slipping one basis point to 2.25%.
On the data front, investors received several economic reports on Friday, including April Durable Orders, the second estimate of first quarter GDP, and the final reading of the University of Michigan Consumer Sentiment Survey for May:
- April durable goods orders declined 0.7%, which is above the 1.8% decrease expected by the consensus. The prior month's reading was revised to 2.3% (from 0.7%). Excluding transportation, durable orders decreased 0.4% (consensus 0.4%) to follow the prior month's revised uptick of 0.8% (from -0.2%).
- The key takeaway from the report is that nondefense capital goods orders excluding aircraft -- a proxy for business spending -- were flat for the second straight month. Shipments of those goods, which factor into GDP forecasts, declined 0.1% in April.
- The second reading of first quarter GDP pointed to an expansion of 1.2%, while the consensus expected a reading of 0.8%. The second estimate of first quarter GDP Deflator came in at 2.2%, which below the consensus of 2.3%.
- The key takeaway from the report is that the revision moved in the right direction, which will aid in tempering concerns about the slowdown when pitted against some otherwise rosy forecasts for the second quarter (Atlanta Fed GDPNow model at 4.1%) that should produce a more encouraging average for the first half of 2017.
- The final reading of the University of Michigan Consumer Sentiment Index for May declined to 97.1 (consensus 97.5) from 97.7 in the preliminary reading.
- The key takeaway from the report is that consumer sentiment levels continue to hover at post-election highs despite a politically partisan divide on the economic outlook.
The stock market will be closed on Monday in observance of Memorial Day. On Tuesday, investors will receive April Personal Income (consensus 0.4%) and Spending (consensus 0.4%) at 8:30 ET and May Consumer Confidence consensus 119.5) at 10:00 ET.
- Nasdaq Composite +15.4% YTD
- S&P 500 +7.9% YTD
- Dow Jones Industrial Average +6.7% YTD
- Russell 2000 +1.9% YTD
Closing Market Summary: Stocks Settle Flat Ahead of Memorial Day Weekend