Closing Market Summary: S&P 500 Finishes Flat Despite Strong StartThe S&P 500 closed Friday at its flat line, a fitting end to a flat week; the benchmark index ended just 0.02% above last Friday's close. The session began with a bang, with the S&P 500 adding as much as 1.0%, following a positive overnight performance from Chinese markets and more upbeat earnings. However, sentiment soon shifted, prompting a slow and steady retreat from early highs.
As for the other major averages, the blue-chip Dow Jones Industrial Average added 0.3%, tech-heavy Nasdaq Composite lost 0.5%, and the small-cap Russell 2000 fumbled 1.2%.
China's Shanghai Composite rebounded from a four-year low on Friday, adding 2.9%, despite reporting a lower-than-expected GDP reading (+6.5% actual vs +6.6% consensus). Chinese officials made a collaborative effort to ease investor angst about liquidity risk and China's economic fundamentals.
On the earnings front, Procter & Gamble (PG 87.30, +7.06) and PayPal (PYPL 84.78, +7.30) jumped 8.8% and 9.4%, respectively, after beating earnings estimates. Procter & Gamble wowed investors with quarterly organic sales increasing 4% -- its highest increase since Q1 of its fiscal 2014 year. In addition, Dow component American Express (AXP 106.73, +3.89) enjoyed a healthy gain of 3.8% after besting earnings estimates and raising its profit guidance.
Within the S&P 500 sectors, investors played defense again. The consumer staples (+2.3%), utilities (+1.6%), and real estate (+1.0%) sectors finished atop Friday's leaderboard. Conversely, the consumer discretionary (-0.9%) and health care (-1.0%) sectors weighed on the broader market, and energy (-0.8%) and materials (-0.7%) also underperformed.
Looking at other markets, U.S. Treasuries ticked lower to conclude the week, pushing yields higher. The 2-yr yield and 10-yr yield each increased two basis points to 2.90% and 3.20%, respectively. For the week, the 2-yr yield added four basis points, and the 10-yr yield added three basis points. In addition, the U.S. Dollar Index fell 0.3% to 95.46.
In energy, WTI crude recouped some of its recent losses on Friday, settling 0.8% higher at $69.26/bbl. Still, the commodity remains near a one-month low.
Reviewing Friday's sole economic report, Existing Home Sales for September:
- Existing home sales declined 3.4% month-over-month in September to a seasonally adjusted annual rate of 5.15 million (consensus 5.30 million), which is the lowest sales level since November 2015. Total sales were 4.1% lower than the same period a year ago.
- The key takeaway from the report is that home sales activity was pressured by the limited supply of lower-priced homes and the affordability constraints presented by higher mortgage rates.
Looking ahead, investors will not receive any economic data on Monday.
- Nasdaq Composite +7.9% YTD
- S&P 500 +3.5% YTD
- Dow Jones Industrial Average +2.9% YTD
- Russell 2000 +0.4% YTD