Michael M. Santiago
U.S. stocks on Friday pulled back from their gains, as heavyweight technology names gave up some their advance. Wall Street’s benchmark gauge in the previous session pushed into bull market territory, with the focus now turning to a big week ahead.
By mid-day, the tech-heavy Nasdaq Composite (COMP.IND) was marginally higher by 0.03% to 13,242.96 points, as shares of Tesla (TSLA), Adobe (ADBE) and Netflix (NFLX) rose. The S&P 500 (SP500) was up 0.03% to 4,295.37 points. The index on Thursday officially exited its longest bear-market run since the 1940s.
The blue-chip Dow (DJI) slightly underperformed the other two indexes, falling 0.07% to 33,808.65 points. Gains were capped by a drop in Intel (INTC).
For the week, the major averages were fighting to end in the green. The Nasdaq is up 0.02%, the S&P is up 0.30% and the Dow is up 0.14%.
Of the 11 S&P sectors, six were now in negative territory, led by Materials and Industrials. Consumer Discretionary and Technology topped the gainers.
With no economic data on deck, the spotlight on Friday was on a few major names. Tesla (TSLA) drove higher and was on track for an eleventh straight positive session, after General Motors (GM) said it would join the electric vehicle giant’s charging network. Meanwhile, investors cheered a Wells Fargo stock rating upgrade on Adobe (ADBE). Finally, Netflix (NFLX) was up on a report that subscriber uptake had been strong after its password crackdown.
“Economists are staring at a data calendar so quiet that not even ECB President Lagarde is speaking,” UBS chief economist Paul Donovan said. “Doubtless, former US Treasury Secretary Summers will be on a media channel somewhere, as no force of humanity or nature can stop that, but it is a very quiet day. Without distractions, investors are likely to idly speculate on things like artificial intelligence (the bored ape NFT of 2023).”
Next week will see the consumer inflation report for May and the Federal Reserve’s monetary policy committee meeting. According to the CME FedWatch tool, markets are still pricing in a solid chance of no rate hike.
ING agreed with the market that a pause is the most likely outcome, but noted “there will be some dissent and a shock inflation reading could make it a very close decision. Either way, the Fed will leave the door open to further rate move.”
JPMorgan’s Michael Feroli weighed in: “At next week’s FOMC meeting we expect the Committee will leave rates unchanged while retaining a tightening bias in their communications. The rationale for holding steady was laid out by Vice Chair nominee Jefferson last week: to gain more time to observe how the economy is handling the 500 basis points of rate hikes implemented so far. That said, both hawks and doves recognize that absent a further slowing in growth and inflation the Fed may need to resume hiking.”
Treasury yields were higher on Friday. The longer-end 10-year yield (US10Y) was up 4 basis points to 3.75% while the more rate-sensitive 2-year yield (US2Y) was up 8 basis points to 4.60%. The dollar index (DXY) was higher by 0.20% to 103.55.
