Stocks fluctuated over the course of the trading session on Friday before eventually ending day sharply higher. The Dow closed higher for the fifth time in the past six sessions, reaching a new record closing high.

The major averages reached new highs for the session going into the close of trading. The Nasdaq surged 197.19 points or 1.1 percent to 17,713.62, the S&P 500 (SPI:SP500) jumped 56.44 points or 1.0 percent to 5,648.40 and the Dow climbed 228.03 points or 0.6 percent to 41,563.08.

Meanwhile, the major averages turned in a mixed performance for the week. The Nasdaq slid by 0.9 percent, but the S&P 500 edged up by 0.2 percent and Dow advanced by 0.9 percent.

The higher close on Wall Street came after the Commerce Department released readings on U.S. consumer price inflation that are said to be preferred by the Federal Reserve.

The Commerce Department report showed consumer prices increased in line with economist estimates in the month of July, while the annual rate of price growth was unexpectedly flat.

The report said the personal consumption expenditures (PCE) price index rose by 0.2 percent in July after inching up by 0.1 percent in June. The modest increase matched expectations.

The core PCE price index, which excludes food and energy prices, also crept up by 0.2 percent in July. The uptick matched the increase seen in June as well as economist estimates.

Meanwhile, the report said the annual rates of growth by the PCE price index and the core PCE price index were both unchanged at 2.5 percent and 2.6 percent, respectively.

Economists had expected the year-over-year growth by both the PCE price index and the core PCE price index to tick up by 0.1 percentage point.

While the data has reinforced expectations of an interest rate cut by the Fed next month, traders expressed uncertainty about the pace of rate cuts, leading to some volatility in the markets.

According to CME Group’s FedWatch Tool, there is a 69.5 percent chance of a quarter point rate cut next month and a 30.5 percent chance of a half point rate cut.

Some analysts, such as Harris Financial Group managing partner Jamie Cox, have said there is no justification for a 50 basis point rate cut.

However, ING Chief International Economist James Knightley said, “A soft jobs report [next week] could still tip the odds in favour of a 50bp rate cut.”

Sector News

Semiconductor stocks showed a substantial move to the upside on the day, resulting in a 2.6 percent surge by the Philadelphia Semiconductor Index.

Intel (NASDAQ:INTC) helped lead the sector higher, spiking by 9.5 percent after a report from Bloomberg said the chipmaker is working with investment bankers to consider various options, including a split of its product-design and manufacturing businesses.

Chipmaker Marvell Technology (NASDAQ:MRVL) also soared by 9.2 percent after reporting better than expected fiscal second quarter results.

Significant strength also emerged among retail stocks, as reflected by the 1.7 percent gain posted by the Dow Jones U.S. Retail Index.

Computer hardware, banking and housing stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index advanced by 0.7 percent, while Hong Kong’s Hang Seng Index jumped by 1.1 percent.

Meanwhile, the major European markets ended the day slightly lower. While the French CAC 40 Index edged down by 0.1 percent, the U.K.’s FTSE 100 Index and the German DAX Index both closed just below the unchanged line.

In the bond market, treasuries came under pressure over the course of the session after showing a lack of direction early in the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.4 basis points to 3.911 percent.

Looking Ahead

Following the Labor Day holiday on Monday, the monthly jobs report is likely to be in focus next week, while reports on manufacturing and service sector activity may also attract attention along with the Fed’s Beige Book.

SOURCE: RTTNEWS