Closing Stock Market SummaryThe large-cap indices closed little changed on Friday, as the market took a breather and digested another increase in long-term interest rates. The S&P 500 (+0.2%) and Dow Jones Industrial Average (+0.1%) eked out gains while the Nasdaq Composite (-0.03%) closed fractionally lower. The Russell 2000 declined 0.5%.
The session started with index losses ranging from 0.3% (Dow) to 0.9% (Nasdaq). The shaky start was attributed to valuation-oriented weakness in the growth stocks amid the higher rates, a revenue warning from Nike (NKE 149.59, -9.99, -6.3%) due to supply chain issues, and news that Evergrande didn't make a payment on a dollar-denominated bond yesterday.
The 10-yr yield settled higher by five basis points to 1.46% after touching 1.30% in the wee hours of Thursday morning.
The S&P 500 financials sector (+0.6%) naturally keyed off the higher rates, but it was outpaced by the energy (+0.8%) and communication services (+0.7%) sectors from a percentage standpoint. The real estate (-1.2%), health care (-0.4%), materials (-0.2%), and utilities (-0.2%) sectors closed lower.
Sellers loosened their influence on the market amid a recognition that the S&P 500 reclaimed -- and stayed above -- its 50-day moving average (4439) after opening below the key technical level. Buying efforts, however, were tempered in part due to a recognition that the S&P 500 was already up more than 3.0% from Monday's low.
Resiliently, the Russell 1000 Growth Index overcome an early 0.6% decline and increased 0.1%, matching the gain of the Russell 1000 Value Index (+0.1%).
Costco (COST 467.75, +14.97, +3.3%) and McDonald's (MCD 246.42, +1.64, +0.7%) were two other story stocks today. Costco beat EPS estimates while McDonald's raised its dividend by 7% and announced a resumption of share repurchases.
The 2-yr yield increased one basis point to 0.27%. The U.S. Dollar Index decreased 0.2% to 93.28. WTI crude futures increased 0.9%, or $0.67, to $74.00/bbl.
Reviewing Friday's economic data:
- New home sales increased 1.5% month-over-month to a seasonally adjusted annual rate of 740,000 ( consensus 720,000) from an upwardly revised 729,000 (from 708,000) in July.
- The key takeaway from the report is that new home sales momentum has been slowed by cost constraints that are making it less enticing for builders to build lower-priced homes and by affordability pressures that are making it more challenging for prospective buyers to buy higher-priced homes.
Looking ahead, investors will receive Durable Goods Orders for August on Monday.
- S&P 500 +18.6% YTD
- Nasdaq Composite +16.8% YTD
- Russell 2000 +13.8% YTD
- Dow Jones Industrial Average +13.7% YTD