US Stocks Pause As Economic Engine Cools, Tesla Sells Off, Oil Rally Tests Goldilocks Scenario: What's Driving Markets Friday?

Friday saw a positive start for U.S. stocks, buoyed by relatively moderate job market data, capping off a week marked by not-too-hot and not-too-cold economic indicators, cementing expectations for the end of Fed rate hikes.

Yet the initial optimism for a “Goldilocks” scenario was short-lived as renewed economic concerns caused stocks to trim gains at midday trading. With rising unemployment and declining wage growth, investors are concerned that an economic slowdown will reduce consumer spending, resulting in lower profits for U.S. corporations.

Tesla Inc. TSLA fell over 4% as Elon Musk slashed prices for the Model S and Model X by approximately 14% and 21%.

Oil prices continue to rise on optimism of a Chinese economic stimulus, while oil producers maintained their pledge to keep supplies tight. WTI-grade crude jumped 2% to $85, the highest since November 2022.

Cues From Friday’s Trading:

On Friday, major indices trimmed gains after the open, with the exception of small caps. Both the S&P 500 and the Dow Jones managed to hold flat, while the Nasdaq 100 fell 0.3%. The Russell 2000 rose 1.1%.

US Index Performance On Friday

Friday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was flat at $450.42
• The SPDR Dow Jones Industrial Average ETF DIA edged 0.1% up to $348
• The Invesco QQQ Trust QQQ fell 0.3% to $377, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Energy Select Sector SPDR Fund XLE was the outperformer, up 1.8% today.
• The Consumer Staples Select Sector SPDR Fund XLP fell the most, down 1%, followed by the the Utilities Select Sector SPDR Fund XLU, down 0.9% and the Communication Services Select Sector SPDR Fund XLC, down 0.8%.

Latest Economic Data:

Read also: August Job Creation Tops Forecasts, But Unemployment Ticks Higher, Wage Growth Slows

Read also: Manufacturing PMI Inches Higher, But Still Signals Industry Contraction, Cements Case For Interest Rates On Hold

Stocks In Focus:

• Lululemon Athletica Inc. LULU rose over 5%, after strong earnings results released on Thursday.
• China-related equities rallied amid growing optimism for government stimulus. Alibaba Group Holdings Ltd. (NYSE BABA), NIO Inc. NIO, Li Auto Inc. LI, PDD Holdings Inc. PDD, JD.com Inc. JD, Baidu Inc. BIDU and Tencent Music Enternainment Group TME saw gains between 3% and 7%.
• Entertainment stocks dipped as Disney DIS restricts channels like ESPN and ABC on Charter’s cable. Warner Bros. Discovery, Inc. WBD fell 9% and Charter Communications, Inc. CHTR eased 2.5%
Among the other stocks moving on earnings are Broadcom, Inc. AVGO (down over 5%), Dell Technologies, Inc. DELL (up about 22%), MongoDB, Inc. MDB (up about 5%), Oxford Industries, Inc. OXM (down about 2%), PagerDuty, Inc. PD (down nearly 7%), and SentinelOne, Inc. S (up about 5%).

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose nearly 2%, with a barrel of WTI-grade crude trading at $85. The United States Oil Fund ETF USO was 1.8% higher to $76.

Treasury yields were slightly higher, with the 10-year yield up by 7 basis points to 4.19% and the two-year yield up by 2 basis points to 4.88%. The iShares 20+ Year Treasury Bond ETF TLT was 2% lower for the day.

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.6% lower to 1.0780.

European equity indices had a negative session. The SPDR DJ Euro STOXX 50 Etf FEZ fell 0.9%.

Gold edged 0.1% down to $1,937/oz, while silver fell 0.8% to $24.21. Bitcoin BTC/USD was 0.3% lower to $25,855.

Staff writer Piero Cingari updated this report midday Friday.

Photo via Shutterstock.