U.S. stock markets closed higher on Friday to finish a fascinating week as recession fears evaporate. Wall Street has completely recouped whatever ground it lost during the meltdown in the first week of this month. All three major stock indexes ended in positive territory, and for the week, these indexes finished in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.2% to close at 40,659.76. In intraday trading, the blue-chip index was up 163 points. Notably, 22 components of the 30-stock index ended in positive territory while 8 were in the negative zone.
The major gainer of the blue-chip index was The Boeing Co. (BA). The stock price of this struggling aerospace behemoth advanced more than 2%. Boeing currently carries a Zacks Rank #3 (Hold).
The tech-heavy Nasdaq Composite finished at 17,631.72, gaining 0.2% due to the strong performance by technology giants. The S&P 500 increased 0.2% to finish at 5,554.25. Eight out of the 11 broad sectors of the broad-market index ended in positive territory, while three were in the negative zone. The Financials Select Sector SPDR (XLF), the Utilities Select Sector SPDR (XLU), and the Communication Services Select Sector SPDR (XLC) gained 0.7%, 0.5%, and 0.3%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 2.8% to 14.80. A total of 10.11 billion shares were traded on Friday, lower than the last 20-session average of 12.27 billion. Advancers outnumbered decliners on the NYSE by a 2.22-to-1 ratio. On Nasdaq, a 1.53-to-1 ratio favored advancing issues.
Recession Fears Evaporate
In the last couple of weeks, Wall Street witnessed several strong economic data. Solid services sector PMI for July, an unexpected rise in retail and core retail sales in July, two consecutive lower-than-expected weekly jobless claims, and several measures of a dwindling inflation rate boosted market participants’ confidence in the Fed’s much-hyped “soft landing” theory.
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced that housing starts in July decreased to 1.238 million units, missing the consensus estimate of 1.358 million units. The metric for June was revised downward to 1.329 million units from 1.353 million units reported earlier. Year over year, housing starts tumbled 16% in July.
Building permits in July came in at 1.396 million units, lagging the consensus estimate of 1.425 million units. The metric for June was revised upward to 1.454 million units from 1.446 million units reported earlier. Year over year, building permits tanked 7% in July.
The University of Michigan reported that the preliminary index for consumer sentiment in August came in at 67.8%, well above the consensus estimate of 66.6%. The final reading of this metric for July was 66.4%.
The sub-index for current conditions came in at 60.9% in August compared with 62.7% in July. The expectations sub-index came in at 72.1% in August compared with 68.8% in July. Expectations for the inflation rate next year remained the same at 2.9%, while the expectations for the inflation rate over the next five years remained static at 3%.
Weekly Roundup
Last week was a fabulous one for Wall Street. The three major stock indexes – the Dow, the S&P 500, and the Nasdaq Composite – rallied 2.9%, 3.9%, and 5.2%, respectively. The S&P 500 recorded its best week since November 2023. Recently released several strong economic data and a dwindling inflation rate helped restore investors’ faith in risky assets like equities.
In conclusion, the U.S. stock markets closed higher on Friday, finishing a fascinating week as recession fears evaporate. With strong economic data and positive market sentiment, investors are optimistic about the future of the stock market.