Closing Market Summary: Stocks Finish Week on a Positive NoteInvestors pushed the stock market modestly higher on Friday to end a largely positive week on a positive note. The S&P 500 and the Dow added 0.2% and 0.1%, respectively, while the tech-heavy Nasdaq underperformed, shedding 0.1%. For the week, the S&P 500 added 0.7%.
Arguably the most-anticipated events of the week--Friday speeches from Fed Chair Janet Yellen and ECB President Mario Draghi--turned out to be nonevents as the two central bankers provided the market with little to no new information.
Ms. Yellen praised the Fed's regulatory efforts while Mr. Draghi spoke in favor of open trade and argued for raising potential output growth, which was received as dovish. The two central bankers delivered their speeches at the annual Jackson Hole Symposium, which will wrap up on Saturday.
The U.S. Dollar Index (92.49, -0.74, -0.8%) moved sharply lower following the speeches, ending the day at its lowest level since January 2015. Meanwhile, U.S. Treasuries finished mostly higher; the 10-yr yield dropped three basis points to 2.17% while the 2-yr yield settled flat at 1.33%.
In the equity market, nine of the eleven sectors finished Friday in positive territory, but gains were modest for the most part. The telecom services group (+0.8%) showed relative strength while the remaining advancers settled with gains of 0.5% or less. Technology (-0.1%) and health care (-0.1%) were the two laggards.
Within the tech sector, chipmakers showed relative weakness, sending the PHLX Semiconductor Index lower by 0.5%. Broadcom (AVGO 245.59, -9.46) led the semiconductor retreat, dropping 3.7%, despite beating bottom-line estimates.
Meanwhile, within the health care group, biotech names underperformed, evidenced by the 0.6% decrease in the iShares Nasdaq Biotechnology ETF (IBB 311.05, -1.82).
On a positive note, the Dow Jones Transportation Average, which is seen as a leading indicator, registered its third win of the week, climbing higher by 1.3%.
Reviewing Friday's economic data, which was limited to July Durable Orders:
- July durable goods orders declined 6.8%, which is more than the 6.0% decrease expected by the consensus. The prior month's reading was revised to +6.4% (from +6.5%). Excluding transportation, durable orders increased 0.5% (consensus +0.5%) to follow the prior month's revised uptick of 0.1% (from 0.2%).
- The upshot of the report was in the shipments and new orders for nondefense capital goods excluding aircraft. Shipments for that component, which factors into GDP computations, increased 1.0% while orders, which are considered a proxy for business spending, increased 0.4%. The key takeaway from the report, then, is that it connotes good growth news for the manufacturing sector early in the third quarter.
On Monday, investors will receive two pieces of economic data--July International Trade in Goods and Advance Wholesale Inventories. Both reports will cross the wires at 8:30 ET.
- Nasdaq Composite +16.4% YTD
- Dow Jones Industrial Average +10.4% YTD
- S&P 500 +9.1% YTD
- Russell 2000 +1.6% YTD