U.S. Stocks Finish Volatile Session Mostly Higher

Stocks saw considerable volatility during trading on Friday after coming under pressure early in the session. The major averages bounced back and forth across the unchanged line before eventually closing in positive territory.

After slumping by more than 270 points in early trading, the Dow rose 60.08 points or 0.3 percent to 23,685.42. The Nasdaq advanced 70.84 points or 0.8 percent to 9,014.56 and the S&P 500 climbed 11.20 points or 0.4 percent to 2,863.70.

Despite turning positive for two straight sessions, the Dow posted notable losses for the week. The Dow plunged by 2.7 percent, the S&P 500 tumbled by 2.3 percent and the Nasdaq slumped by 1.2 percent.

The higher close on Wall Street came as traders shrugged off the release of some dismal U.S. economic data, including reports showing record decreases in retail sales and industrial production in the month of April.

The Commerce Department said retail sales cratered by 16.4 percent in April after tumbling by a revised 8.3 percent in March.

Economists had expected retail sales to plummet by 12.0 percent compared to the 8.7 percent slump originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales plunged by an even steeper 17.2 percent in April after falling by a revised 4.0 percent in March.

Ex-auto sales were expected to tumble by 8.6 percent compared to the 4.5 percent nosedive originally reported for the previous month.

A separate report from the Federal Reserve showed industrial production plummeted by 11.2 percent in April after tumbling by a revised 4.5 percent in March.

Economists had expected production to plunge by 11.5 percent compared to the 5.4 percent nosedive originally reported for the previous month.

Concerns about the economy may have been offset by a report from the University of Michigan showing an unexpected improvement in consumer sentiment in the month of May.

The report said the consumer sentiment index rose to 73.7 in May after plummeting to 71.8 in April. The rebound surprised economists, who had expected the index to slip to 68.0.

Another report released by the New York Federal Reserve showed regional manufacturing activity continued to deteriorate significantly in the month of May, although the pace of contraction slowed considerably from the previous month.

The New York Fed said its general business conditions index jumped nearly thirty points to a negative 48.5 in May from a negative 78.2 in April.

While a negative reading indicates a continued contraction in regional manufacturing activity, the index came in well above economist estimates for a reading of negative 63.5.

Sector News

Gold stocks moved sharply higher over the course of the session, driving the NYSE Arca Gold Bugs Index up by 4.1 percent to its best closing level in seven years.

The rally by gold stocks came amid a continued increase by the price of the precious metal, with gold for June delivery jumping $15.40 to $1,756.30 an ounce.

Significant strength also emerged among biotechnology stocks, as reflected by the 2.7 percent spike by the NYSE Arca Biotechnology Index.

Software, natural gas, tobacco and retail stocks also saw considerable strength, contributing to the higher close by the broader markets.

On the other hand, semiconductor stocks showed a substantial move to the downside, dragging the Philadelphia Semiconductor Index down by 2.2 percent.

The weakness in the sector came after the Trump administration moved to block shipments of semiconductors to Chinese telecom giant Huawei Technologies.

Banking, utilities and transportation stocks also saw notable weakness, partly offsetting the strength seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index climbed by 0.6 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index inched up by 1 percent, the U.K.’s FTSE 100 Index and the German DAX Index jumped by 1 percent and 1.2 percent, respectively.

In the bond market, treasuries turned lower over the course of the session after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.1 basis points to 0.640 percent.

Looking Ahead

News on the coronavirus front is likely to remain in the spotlight next week, although traders are also likely to keep an eye on reports on homebuilder confidence, housing starts, and existing home sales as well as Congressional testimony by Federal Reserve Chair Jerome Powell.

On the earnings front, retail giants Walmart (WMT), Home Depot (HD), Lowe’s (LOW), Target (TGT), and Best Buy (BBY) are among the companies due to report their quarterly results next week.

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