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U.S. Stocks Finish Volatile Session Sharply Higher But Still Close Lower For The Week

wallstreet aug14 01jul22 lt

Stocks showed wild swings over the course of the trading session on Friday before ending the day sharply higher. With the strong upward move, the major averages regained some ground after moving notably lower over the past few sessions.

The major averages saw further upside in the final hour of trading, reaching new highs for the session. The Dow jumped 321.83 points or 1.1 percent to 31,097.26, the Nasdaq advanced 99.11 points or 0.9 percent to 11,127.85 and the S&P 500 shot up 39.95 points or 1.1 percent to 3,825.33.

Despite the strong gains on the day, the major averages posted notable losses for the week. The tech-heavy Nasdaq plunged by 4.1 percent, the S&P 500 tumbled by 2.2 percent and the Dow slumped by 1.3 percent.

The higher close on Wall Street came as traders went bargain hunting following the significant decrease seen early in the session.

Concerns about the possibility of tighter monetary policy triggering a global recession continue to weigh on the markets in early trading.

Central banks from around the world have signaled their intent to continue to raising interest rates in an effort to fight inflation while acknowledging they can't guarantee a "soft landing" for the economy.

Stocks came under pressure following the release of a report from the Institute for Supply Management showing the pace of growth in U.S. manufacturing activity slowed by more than expected in the month of June.

The ISM said its manufacturing PMI slid to 53.0 in June from 56.1 in May, although a reading above 50 still indicates growth in the sector. Economists had expected the index to dip to 54.9.

With the bigger than expected decrease, the manufacturing PMI slumped to its lowest level since hitting 52.4 in June of 2020.

A separate report from the Commerce Department showed U.S. construction spending unexpectedly edged lower in the month of May.

"Wall Street isn't liking seeing so many key economic indicators have a trajectory that looks like they will retest some of the pandemic lows," said Edward Moya, Senior Market Analyst at OANDA.

He added, "A choppy period seems likely until investors feel confident that the economy is still in decent shape and that the Fed won't miss the opportunity to decelerate their tightening pace in September."

Sector News

Housing stocks moved sharply higher over the course of the trading session, driving the Philadelphia Housing Sector Index up by 3.9 percent.

Substantial strength also emerged among gold stocks, as reflected by the 2.9 percent spike by the NYSE Arca Gold Bugs Index. The index rebounded after hitting its lowest intraday level in over two years.

The rally by gold stocks came despite a continued decrease by the price of the precious metal, with gold for August delivery falling $5.80 to $1,801.50 an ounce.

Biotechnology stocks also showed a strong move to the upside on the day, resulting in a 2.5 percent jump by the NYSE Arca Biotechnology Index.

Utilities, airline, retail and commercial real estate stocks also moved notably higher over the course of the session, while significant weakness remained visible among semiconductor and computer hardware stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index dove by 1.7 percent, while China's Shanghai Composite Index dipped by 0.3 percent.

Meanwhile, the major European markets turned in a lackluster performance on the day. While the U.K.'s FTSE 100 Index closed just below the unchanged, the French CAC 40 Index inched up by 0.1 and the German DAX Index edged up by 0.2 percent.

In the bond market, treasuries gave back some ground after an early rally but remained firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.3 basis points to a one-month closing low of 2.889 percent.

Looking Ahead

Following the long holiday weekend, the Labor Department's monthly jobs report is likely to be in the spotlight next week. Traders are also likely to keep an eye on reports on factory orders, the U.S. trade deficit and service sector activity.

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