Nasdaq, S&P 500 Reach New Record Highs But Dow Extends Pullback

(RTTNews) - The major U.S. stock indexes all moved to the upside early in the session on Friday but turned mixed over the course of the trading day. While the Nasdaq and the S&P 500 managed to remain in positive territory and reach new record closing highs, the narrower Dow pulled back into negative territory.

The tech-heavy Nasdaq ended the session near its best levels of the day, climbing 159.05 points or 0.8 percent to 19,859.77. The S&P 500 also rose 15.16 points or 0.3 percent to 6,090.27, but the Dow fell 123.19 points or 0.3 percent to 44,642.52.

The major averages also turned in a mixed performance for the first week of December. The Dow slid by 0.6 percent, while the S&P 500 jumped by 1.0 percent and the Nasdaq surged by 3.3 percent.

The Dow pulled back further off the record closing high set on Wednesday amid a continued slump by shares of UnitedHealth (UNH).

UnitedHealth tumbled by 5.1 percent, adding to the 5.2 percent drop seen on Thursday on the heels of Wednesday's fatal shooting of UnitedHealthcare CEO Brian Thompson.

Meanwhile, the Nasdaq and the S&P 500 benefited from a positive reaction to a closely watched Labor Department showing employment in the U.S. surged by more than expected in the month of November.

The Labor Department said non-farm payroll employment shot up by 227,000 jobs in November after rising by an upwardly revised 36,000 jobs in October.

Economists had expected employment to jump by 200,000 jobs compared to the uptick of 12,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate crept up to 4.2 percent in November from 4.1 percent in October. The modest increase matched economist estimates.

The uptick by the unemployment rate increased confidence the Federal Reserve will lower interest rates by another 25 basis points later this month.

"Despite the strong headline number this morning, the Fed is likely to note the overall slowing in the job market and cut rates by 25 bps in 2 weeks, unless the next CPI report is white hot," said Chris Zaccarelli, Chief Investment Officer, Northlight Asset Management.

He added, "Given the positive backdrop of strong economic growth, a healthy labor market, and inflation that is relatively contained, the Fed can keep cutting rates and that should allow the bull market to run into the end of the year and into early next year."

In other U.S. economic news, the University of Michigan released a report showing consumer sentiment in the U.S. has improved by slightly more than anticipated in the month of December.

The University of Michigan said its consumer sentiment index climbed to 74.0 in December from 71.8 in November. Economists had expected the index to rise to 73.0.

However, the report also said year-ahead inflation expectations jumped to 2.9 percent in December from 2.6 percent in November, reaching a six-month high.

Sector News

Computer hardware stocks turned in some of the market's best performances on the day, with the NYSE Arca Computer Hardware Index jumping by 2.1 percent to its best closing level in well over four months.

Hewlett Packard Enterprise (HPE) helped lead the sector higher, spiking by 10.6 percent after Citigroup upgraded its rating on the company's stock to Buy from Neutral.

Considerable strength was also visible among retail stocks, as reflected by the 1.8 percent gain posted by the Dow Jones U.S. Retail Index.

On the other hand, oil service stocks moved sharply lower, resulting in a 3.5 percent nosedive by the Philadelphia Oil Service Index.

Oil producer stocks also came under pressure amid a decrease by the price of crude oil, while notable weakness also emerged among natural gas, steel and gold stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance during trading on Friday. While Japan's Nikkei 225 Index slid by 0.8 percent, China's Shanghai Composite Index jumped by 1.1 percent.

The major European markets also ended the day mixed. The French CAC 40 Index jumped by 1.3 percent and the German DAX Index inched up by 0.1 percent, but the U.K.'s FTSE 100 Index fell by 0.5 percent.

In the bond market, treasuries moved to the upside after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.9 basis points to 4.151 percent.

Looking Ahead

Next week's trading is likely to be driven by reaction to reports on consumer and producer price inflation, which could impact the outlook for interest rates.