U.S. Stocks Pull Back Off Best Levels But Close Modestly Higher

(RTTNews) - After an early move to the upside, stocks gave back ground over the course of the trading session on Friday but managed to close modestly higher. The uptick on the day came on the heels of the downward trend seen over the past few sessions.

The major averages edged higher going into the close of trading. The Dow rose 75.86 points or 0.2 percent to 34,576.59, the Nasdaq inched up 12.69 points or 0.1 percent to 13,761.53 and the S&P 500 crept up 6.35 points or 0.1 percent to 4,457.49.

Despite the uptick on the week, the major averages closed notably lower for the week. The Nasdaq tumbled by 1.9 percent, the S&P 500 slumped by 1.3 percent and the Dow slid by 0.8 percent.

The modest strength on Wall Street partly reflected bargain hunting, as some traders pick up stocks at reduced levels following recent weakness. The uptick by the Nasdaq snapped a four-day losing streak.

Some traders may also have felt concerns about the outlook for interest rates, which contributed to the recent weakness, have been overdone.

While recent economic data has led to worries the Federal Reserve may leave rates higher for longer than previously anticipated, the central bank is still widely expected to keep rates unchanged later this month.

Overall trading activity was somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines ahead of the release of key reports next week.

Next week will see the release of key reports on consumer and producer inflation as well as reports on retail sales, industrial production and consumer sentiment.

"The August inflation report will tell a mixed story as surging energy prices weigh on headline inflation," predicted Edward Moya, senior market analyst at OANDA. "Core readings however are expected to remain steady and that should support a September skip by the Fed."

He added, "The risks for a November rate hike remain on the table and that will only happen if US growth exceptionalism remains in place."

CME Group's FedWatch Tool is currently indicating a 93.0 percent chance the Federal Reserve will leave interest rates later this month but a 43.4 percent chance of another rate hike in November.

Sector News

Oil stocks showed a significant move to the upside on the day, benefitting a rebound by the price of crude oil following the pullback seen on Thursday.

With crude for October delivery climbing $0.64 to $87.51 a barrel, the NYSE Arca Oil Index advanced by 1.4 percent to a record closing high.

Notable strength was also visible among banking stocks, as reflected by the 1.1 percent gain posted by the KBW Bank Index.

Brokerage, utilities and software stocks also saw some strength on the day, while telecom stocks came under pressure over the course of the session.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.2 percent, while China's Shanghai Composite Index edged down by 0.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index inched up by 0.1 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index climbed by 0.5 percent and 0.6 percent, respectively.

In the bond, treasuries pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.258 percent.

Looking Ahead

The Labor Department's report on consumer price inflation in the month of August is likely to be in the spotlight next week, as the data could have a significant impact on the outlook for interest rates.