Stocks close mostly higher as energy sector stabilizes
U.S. equities closed mostly higher on Friday as energy stocks stemmed this week’s sell-off.
“It’s pretty tough to knock this market down,” said Marc Chaikin, CEO of Chaikin Analytics. “There has been some very healthy rotation within the sectors in between earnings seasons.”
The S&P 500 rose 0.1 percent as energy gained 0.7 percent to lead advancers and snapped a four-day losing streak. Energy stocks came under pressure as crude prices fell on oversupply concerns.
U.S. oil futures for August delivery gained 0.63 percent to settle at $43.01 a barrel after a decline in the IHS Markit U.S. Output Composite index hit a three-month low, pushing the dollar lower and lifting crude prices, according to John Kilduff, founding partner at Again Capital.
The Nasdaq composite climbed 0.4 and was rose 1.84 percent for the week after a sharp rally in health care.
Health care stocks pulled back about 0.1 percent Friday, but the sector still notched a weekly gain of 3.7 percent to outperform the other spaces.
Overall, U.S. stocks closed little changed for the week, with the Dow and S&P posting small gains in the period.
“There’s not a lot of information that can move stocks out there right now,” said Kim Forrest, senior equity analyst at Fort Pitt Capital. “I think we’ve entered the summer doldrums already.”
Wall Street also kept an eye on financials Friday after testing results released Thursday by the Fed show the 34 institutions under scrutiny have enough capital to make it through a scenario akin to the financial crisis. The results briefly lifted financials on Friday.
“We thought the stress test results would be pretty good, but it’s always nice to see it in writing,” said Ernie Cecilia, CIO at Bryn Mawr Trust. “Financials have been under pressure lately because of the yield curve flattening.”
Treasury yields have fallen from their 2017 highs recently, with the benchmark 10-year yield trading around 2.15 percent. In March, it traded around 2.6 percent.
“The bond market doesn’t see inflation coming in the near term, and so far it’s been right,” Cecilia said.
The consumer price index fell 0.1 percent in May, raising questions about whether the Fed will be able to raise rates once more this year. The next rate hike isn’t fully priced in until March 2018, according to the CME Group’s FedWatch tool.
Adding to deflationary concerns lately, have been falling oil prices. U.S. crude was down more than 4 percent this week.
In economic news, new home sales rose 2.9 percent in May, below the expected increase of 3.7 percent.
Meanwhile, Cleveland Fed President Loretta Mester said the Fed cannot directly address the problems of inequality, globalization and the challenges facing lower-income Americans, though it can help identify solutions for legislators to take up. Mester did not discuss monetary policy.
” Fed speak has been mostly hawkish this week as most expect one more rate hike this year,” said Peter Ng, senior FX trader at Silicon Valley Bank. But “there’s little evidence that inflation is picking up.”
The Dow Jones industrial average (.DJI) fell 2.53 points, or 0.01 percent, to close at 21,394.76, with Visa leading advancers and Home Depot lagging.
The S&P 500 (.SPX) gained 3.80 points, or 0.16 percent, to close at 2,438.30, with energy leading six sectors higher and financials care lagging.
The Nasdaq (.IXIC) advanced 28.56 points, or 0.46 percent, to end at 6,265.25.
About two stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 2.081 billion and a composite volume of 4.857 billion at the close.
The CBOE Volatility Index (VIX) (.VIX), widely considered the best gauge of fear in the market, traded near 10.