Wall Street closed higher on Friday, led by a tech resurgence. Inflation numbers raised optimism that the first rate cut by the Fed is almost locked in. All of the three major stock indexes ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 654.27 points, or 1.6%, to close at 40,589.34. Twenty-seven components of the 30-stock index ended in positive territory, while three ended in negative.
The tech-heavy Nasdaq Composite gained 176.16 points, or 1%, to close at 17,357.88.
The S&P 500 increased 59.88 points, or 1.1%, to close at 5,459.10. All of the 11 broad sectors of the benchmark index closed in the green. The Communication Services Select Sector SPDR (XLC), the Industrials Select Sector SPDR (XLI) and the Real Estate Select Sector SPDR (XLRE) advanced 1.9%, 1.7% and 1.7%, respectively.
The fear-gauge CBOE Volatility Index (VIX) decreased 11.2% to 16.39. A total of 10.9 billion shares were traded on Friday, lower than the last 20-session average of 11.6 billion.
Tech Stages a Comeback on Broadbased Market Revival
On Friday, the tech sector pared some of the losses it made in the week while every S&P 500 sector had a winning session. The Technology Select Sector SPDR (XLK) jumped 1.3%, primarily on most of the “Magnificent 7” stocks doing well. Mega-cap growth stocks like tech usually do well when inflation seems to be coming down.
PCE inflation, the Fed’s favorite metric, was released last Friday, solidifying the existing optimism about an impending rate cut. PCE inflation for June came in at an encouraging 0.2%, decreasing from the revised May number of 0.4%. The May PCE was previously reported to be at 0.3%.
Core PC also came in at 0.2% for June. This was an increase from the unrevised 0.1% reported in May. This, however, did not stop from mega-cap growth stocks rejoicing, and the wider market also made gains.
Consequently, shares of Amazon.com, Inc. AMZN and Meta Platforms, Inc. META rose 1.5% and 2.7%, respectively. Amazon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Oil Prices Fall on China Demand Concerns
On Friday, Brent crude fell $1.24, or 1.5%, to settle at $81.13/barrel, while WTI crude declined $1.12, or 1.4%, to settle at $77.16/barrel. While the energy prices are currently being dominated by ceasefire talks in the Middle East and the resultant supply boost, falling demand for oil in China, one of the largest importers of oil in the world, remains a major concern.
Weekly Summary
The three benchmark indexes closed a mixed week last Friday. While the Dow gained 0.8%, the S&P 500 declined 0.8% and the Nasdaq dropped 2.1%. The markets were dominated by fuel prices, tech uncertainty over earnings and the Fed’s outlook and the inflation reports.
Economic Data
Per BEA data, personal income increased $50.4 billion or 0.2% in June. Disposable personal income increased $37.7 billion or 0.2%. Personal spending increased 0.3% and the personal saving rate came in at 3.4%.
The consumer confidence for July, reported by the University of Michigan, was revised to 66.4 from the previously reported 66.
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