Stocks Close Mixed On The Day But Sharply Higher For The Week - U.S. Commentary

(RTTNews) - Following the volatility seen in the days surrounding Election Day, stocks turned in a relatively lackluster performance during trading on Friday. The major averages spent the day bouncing back and forth across the unchanged line before eventually closing mixed.

While the S&P 500 edged down 3.03 points or 0.1 percent to 2,164.45, the Dow rose 39.78 points or 0.2 percent to a new record closing high of 18,847.66 and the Nasdaq climbed 28.32 points or 0.5 percent to 5,237.11.

Despite the mixed performance on the day, the major averages all moved sharply higher for the week. The Dow soared by 5.4 percent, while the Nasdaq and the S&P 500 both surged up by 3.8 percent.

The choppy trading on Wall Street came as the markets paused to take a breath after the gains seen in reaction to President-election Donald Trump's surprise victory lifted the Dow to a record closing high on Thursday.

Some traders were also away from their desks due to the Veterans Day holiday, as banks and the bond markets were closed on the day.

On the U.S. economic front, the University of Michigan released a report showing a much bigger than expected rebound in consumer sentiment in the month of November.

The preliminary report showed that the consumer sentiment index jumped to 91.6 in November after slumping to 87.2 in October. Economists had expected the index to inch up to 87.5.

With the bigger than expected increase, the consumer sentiment index reached its highest level since climbing to 94.7 in May.

However, Richard Curtin, the survey's chief economist, said the most striking finding in early November was a jump in both near and long-term inflation expectations.

The report said one-year inflation and five-year inflations expectations both spiked to 2.7 percent in November from 2.4 percent in October.

"These increases must be replicated before they can be taken to indicate a troublesome development," Curtin said. "Nonetheless, it may be viewed as added justification for next month's expected interest rate hike."

With regard to interest rates, Federal Reserve Vice Chairman Stanley Fischer said the case for gradually removing accommodation is quite strong, as the Fed is close to achieving its dual mandate.

"In my view, the prospects of a continued steady expansion in the U.S. economy are maximized to the extent that we proceed with a gradual removal of accommodation," Fischer said in remarks to a central banking conference in Santiago, Chile.

He added, "Such a gradual approach to tightening policy will also help mitigate the risk of undesirable spillovers abroad--including by reducing the risk of having to tighten more abruptly later on--and in turn promote a stronger global economy."

Sector News

Semiconductor stocks moved sharply higher over the course of the trading day, driving the Philadelphia Semiconductor Index up by 3.9 percent. With the gain, the index reached its best closing level in a month.

Graphics chip maker Nvidia (NVDA) led the sector higher after reporting better than expected third quarter results and providing upbeat guidance.

Considerable strength was also visible among electronic storage stocks, as reflected by the 2.9 percent gain posted by the NYSE Arca Disk Drive Index. The jump lifted the index to a four-month closing high.

Brokerage, trucking, and networking stocks also moved notably higher, extending the upward trend seen in the recent sessions.

On the other hand, gold stocks fell sharply on the day, dragging the NYSE Arca Gold Bugs Index down by 8 percent to a seven-month closing low. The weakness in the sector came as gold for December delivery plunged $42.10 to $1,224.30 an ounce.

Energy and pharmaceutical stocks also came under pressure, giving back some ground after rising sharply in reaction to Trump's surprise victory.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday following the mixed closed on Wall Street overnight. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang Seng Index slumped by 1.4 percent.

The major European markets also turned mixed over the course of the trading session. While the German DAX Index rose by 0.4 percent, the French CAC 40 Index dropped by 0.9 percent and the U.K.'s FTSE 100 Index tumbled by 1.4 percent.

Meanwhile, as mentioned above, the bond markets were closed for the day in honor of the Veterans Day holiday.

Looking Ahead

Next week's trading may be impacted by a slew of U.S. economic data, including reports on retail sales, producer and consumer prices, industrial production, and housing starts.

On the earnings front, retail giants Wal-Mart (WMT), Home Depot (HD), Target (TGT), and Best Buy (BBY) are among the companies due to report their quarterly results next week.