Stocks saw modest weakness throughout much of the trading session on Friday but recovered to end the day roughly flat. The tech-heavy Nasdaq bounced back and forth across the unchanged line before eventually ending the session at a record closing high.

While the Nasdaq (NASDAQI:COMP) crept up 21.32 points or 0.1 percent to 17,688.88, the S&P 500 (SPI:SP500) edged down 2.14 points or less than a tenth of a percent to 5,431.60 and the Dow (DOWI:DJI) dipped 57.94 points or 0.2 percent to 38,589.16.

For the week, the Nasdaq surged by 3.2 percent and the S&P 500 jumped by 1.6 percent, but the Dow bucked the uptrend and fell by 0.5 percent.

Traders looked to cash in on recent strength in the markets early in the session, but selling pressure remained subdued amid the release of tamer than expected inflation data.

While Federal Reserve officials forecast just one rate cut this year following this week’s monetary policy meeting, traders are hopeful the predictions will turn out to be overly conservative if inflation continues to slow in the coming months.

“A lot can happen in a week. Markets became nervous after last Friday’s strong payroll report but after several good inflation releases this week, yields fell and equities rose,” said Jeffrey Roach, Chief Economist for LPL Financial.

“As we learned from the press conference, Chairman Powell is ready to respond as the data allow,” he added. “At this point, inflation pressures are stuck with some sticky components, but other indicators suggest that inflation is easing and investors should expect the Fed to begin cutting rates later this year.”

The Labor Department released a report showing unexpected decreases by U.S. import and export prices in the month of May.

The Labor Department said import prices fell by 0.4 percent in May following a 0.9 percent advance in April. Economists had expected import prices to inch up by 0.1 percent.

Prices for fuel imports led the way lower, tumbling by 2.0 percent, although prices for non-fuel imports also dipped by 0.3 percent.

Meanwhile, the report said export prices slid by 0.6 percent in May after climbing by an upwardly revised 0.6 percent in April.

Economists had expected export prices to come in unchanged compared to the 0.5 percent increase originally reported for the previous month.

Meanwhile, a separate report from the University of Michigan showed a continued deterioration in U.S. consumer sentiment in the month of June.

The report said the consumer sentiment index fell to 65.6 in June after tumbling to 69.1 in May. Economists had expected the index to rebound to 72.0.

With the unexpected decrease, the consumer sentiment index dropped to its lowest level since hitting 61.3 in November 2023.

On the inflation front, the report said year-ahead inflation expectations were unchanged at 3.3 percent in June, above the 2.3-3.0 percent range seen in the two years prior to the pandemic.

Long-run inflation expectations, on the other hand, inched up to 3.1 percent in June from 3.0 percent in May, reaching the highest level since hitting 3.2 percent in November 2023.

Sector News

Oil service stocks saw substantial weakness amid a modest decrease by the price of crude oil, with the Philadelphia Oil Service Index plunging by 2.0 percent to its lowest closing level in four months.

Considerable weakness was also visible among airline stocks, as reflected by the 2.0 percent slump by the NYSE Arca Airline Index. With the decrease, the index fell to a six-month closing low.

Steel, computer hardware and networking stocks also saw notable weakness, while software and gold stocks moved to the upside on the day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region once again turned in a mixed performance on Friday. Japan’s Nikkei 225 rose by 0.2 percent and China’s Shanghai Composite Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index slumped by 0.9 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index plummeted by 2.7 percent, the German DAX Index tumbled by 1.4 percent and the U.K.’s FTSE 100 Index dipped by 0.2 percent.

In the bond market, treasuries extended the upward trend seen over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.5 basis points to a two-month closing low of 4.213 percent.

Looking Ahead

Report on retail sales, industrial production, housing starts and existing home sales may attract attention next week, although trading activity may be somewhat subdued due to the Juneteenth holiday on Wednesday.

SOURCE: RTTNEWS