Stocks Show Strong Rebound Following Yesterday's Sell-Off - U.S. Commentary

(RTTNews) - Following the sell-off seen in the previous session, stocks showed a strong move back to the upside over the course of the trading day on Friday. The Dow nearly offset yesterday's steep loss but still finished below the record closing high set on Wednesday.

The major averages ended the day sharply higher, near their best levels of the session. The Dow climbed 123.37 points or 0.7 percent to 17,100.18, the Nasdaq surged up 68.70 points or 1.6 percent to 4,432.15 and the S&P 500 jumped 20.10 points or 1 percent to 1,978.22.

Even with the volatility seen over the past two sessions, the major average still moved higher for the week. The Dow advanced by 0.9 percent, while the Nasdaq and the S&P 500 rose by 0.4 percent and 0.5 percent, respectively.

The strength on Wall Street was partly due to bargain hunting following yesterday's sell-off, which pulled the Nasdaq and the S&P 500 down to their lowest closing levels in almost a month.

Traders also reacted positively to the latest batch of earnings news, with shares of Honeywell (HON) rising by 1.7 percent after the diversified manufacturer reported better than expected second quarter results.

Tech giant Google (GOOG) also turned in a strong performance on the day despite reporting second quarter earnings that came in below analyst estimates.

The rebound by stocks also came as traders seemed to shrug off the geopolitical concerns that contributed to the weakness seen in the previous session.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Geopolitical influences on markets are usually fleeting and the news yesterday will likely be too."

"That said, of all the global concerns out there, I remain of the belief that the Federal Reserve is the biggest risk to asset prices than anything geopolitical," he added.

In U.S. economic news, Thomson Reuters and the University of Michigan released a report showing an unexpected deterioration in consumer sentiment in the month of July.

The report said the preliminary reading on the consumer sentiment index for July came in at 81.3 compared to the final June reading of 82.5. Economists had expected the index to edge up to 83.0.

Separately, the Conference Board said its leading economic index rose by 0.3 percent in June following an upwardly revised 0.7 percent increase in May.

Economists had been expecting the index to climb by 0.5 percent, matching the increase originally reported for the previous month.

Sector News

After falling sharply in recent sessions on valuation concerns, biotechnology stocks showed a substantial rebound. The NYSE Arca Biotechnology Index surged up by 2.6 percent after closing lower for three consecutive sessions.

Immunogen (IMGN) helped lead the biotech sector higher, with the company's stock soaring by 8.8 percent on the day.

Brokerage stocks also saw considerable strength, resulting in a 1.9 percent gain by the NYSE Arca Broker/Dealer Index. BGC Partners (BGCP) posted a standout gain, jumping by 5.8 percent.

Significant strength was also visible among airline stocks, which rebounded after helping to lead the sell-off on Thursday. After ending the previous session down by 2.7 percent, the NYSE Arca Airline Index rose by 1.6 percent.

Internet, healthcare, networking, and computer hardware stocks also saw notable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance during trading on Friday. Japan's Nikki 225 Index dropped by 1 percent, while China's Shanghai Composite Index crept up by 0.2 percent.

The major European markets also ended the day mixed. While the German DAX Index fell by 0.4 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index rose by 0.2 percent and 0.4 percent, respectively.

In the bond market, treasuries gave back some ground after ending the previous session sharply higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by nearly a basis point to 2.484 percent.

Looking Ahead

While any further developments overseas could impact next week's trading, traders are also likely to keep an eye on reports on consumer price inflation, durable goods orders, and new and existing home sales.

On the earnings front, Apple (AAPL), Boeing (BA), Coca-Cola (KO), DuPont (DD), Facebook (FB), McDonald's (MCD), and Verizon (VZ) are among the slew of big-name companies scheduled to report their quarterly results next week.