U.S. stocks continued to display signs of divergence between the tech sector and the rest of the market on Friday, a trend that had already surfaced during Thursday’s session.
Following a substantial sell-off in tech stocks yesterday, the Nasdaq remained relatively flat in midday trading, while the Dow saw a 0.2% increase, poised to conclude its 10th consecutive session of gains. This positive streak marks the first such occurrence since February 2017.
Netflix Inc. (NASDAQ:NFLX) extended losses, falling 3% after suffering nearly a 9% decline in its worst session of the year on the previous day.
As $2.3 trillion options expire Friday, traders adopted a cautious approach, particularly with the Nasdaq 100 reshuffle on the horizon. The reshuffle is expected to reduce the dominance of mega-cap companies and elevate the presence of smaller firms.
Cues From Friday’s Trading:
The S&P 500 gained 0.2% on the day, which would project the weekly gains to 0.9%.
Blue chips in the Dow Index were 0.2% higher, up 2.4% for the week.
The tech-heavy Nasdaq 100 was flat, down 0.5% for the week. Small caps in the Russell 2000 were also flat, but rose 1.9% this week.
US Index Performance On Friday
Analyst Color:
As June leading economic indicators index declined by 0.7% in June, economist and gold bug Peter Schiff noted that the last negative streak this long occurred in 2007-2008, during the Great Recession.
He said the number would have been even lower but for a rising stock market.
Morgan Stanley's Lisa Shalett has a slightly different take. A strong labor market, robust housing demand and resurgent business spending could help reignite U.S. economic growth next year, she said in a weekly report released earlier this week.
"With these factors at play, the economy may indeed re-accelerate. If it does, the stock market is likely to feature a new set of winners, with today's high-flying consumer-tech and media names giving way to leaders from other equity sectors, such as industrials, energy, housing, financials and health care, as well as commodities," she added.
The best-performing sectors on Friday were the Utilities Select Sector SPDR Fund (NYSE:XLU), up 1.7%, and the Health Care Select Sector SPDR Fund (NYSE:XLV), up 1.1%.
The laggard was the Communication Services Select Sector SPDR Fund (NYSE:XLC), down 1%.
The futures market has priced in a 99.8% probability of a 25 basis-point Fed rate hike at the July meeting, as inflation still remains above the Fed's target rate.
See also: Best Futures Trading Software
Stocks In Focus:
Commodities, Bonds, Other Global Equity Markets:
Crude oil rose 1%, with a barrel of WTI-grade crude trading at $76.50. The United States Oil Fund ETF (NYSE:USO) was 0.9% higher to $68.70.
Treasury yields were steady, with the 10-year yield down by 2 basis points to 3.83% and the two-year yield up by 1 basis points to 4.86%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) was 0.3% higher for the day.
The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), down 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (NYSE:FXE), was 0.1% lower to 1.1120.
European equity indexes closed in the green. The SPDR DJ Euro STOXX 50 Etf (NYSE:FEZ) rose 0.5%.
Staff writer Piero Cingari updated this report midday Friday.
Photo via Shutterstock.
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