The stock market ended the week on an up note, shaking off mixed bank earnings after five-year inflation expectations took a dive. All major benchmarks closed higher, led by the Dow Jones Industrial Average's 2.2% performance.
S&P 500 rose 1.9% while the Nasdaq composite brought up the rear with a 1.8% gain. The Dow, S&P 500 and Nasdaq all posted small weekly losses.
Preliminary closing volume was lower vs. Thursday's session, led by a 7.4% Nasdaq decline. NYSE volume fell 1.1%.
Retail sales rose 1% in June, beating 0.8% expectations. However, the headline number wasn't adjusted for inflation. June inflation rose 1.1%, so the matching increase in retail sales translates into little or no overall change.
Motor vehicle and parts sales rose 0.8%. Food and beverage sales gained a smaller 0.4%, raising hopes that the worst is over for stressed-out food shoppers. Gasoline sales posted the highest increase of the trio, at 3.6%, in line with ongoing sticker shock.
Dow and IBD 50 component UnitedHealth Group gapped up to July resistance after beating Q2 estimates by $0.36, posting a profit of $5.57 per-share.
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Summer Rally Or Summer Pain?
Odds for a 100-basis-point hike in interest rates rose from 8% to 83% after Wednesday's CPI report, according to Jim Bianco at Bianco Research. Those odds crashed back to 16% on Friday, in reaction to an upbeat University of Michigan Five-Year Inflation Expectations report. The rapidly changing consensus is viewing bad June numbers as "peak pain" ahead of steady improvement.
Major stock market averages posted 52-week lows in mid-June but have been rebounding moderately. Resilience in the last few sessions, after bearish economic numbers, adds to a growing list of positives. This price action could mark the start of the long-awaited summer rally, or at least the 2022 version of that seasonal event.
Finally, it's bearish that old leaders are grabbing so much attention right now. Former FAANG favorites are pulling out of nose-dives on rising volume, while Cathie Wood's ARK Innovation ETF is hanging tough at the 50-day moving average.
Unfortunately, the leaders in one economic cycle rarely lead the next advance, so this preoccupation looks so far more like a countertrend than a new bull market.
Friday Stock Market Highlights
UnitedHealth Group rallied into the 518.80 buy point at the opening bell and held above that level into the close. This price action is clearing the handle of a cup-with-handle base, according to MarketSmith analysis. This marks a second entry signal, after a brief incursion on July 8.
The relative strength line stalled at a new high two weeks ago and wobbled sideways in a consolidation. That line surged to a new high today, improving odds for a successful breakout.
IBD 50 component and energy drink maker Monster Beverage briefly rallied 12 cents above the 98.83 double-bottom buy point. Shares faded quickly off that level, but daily volume remained higher than average into the close.
Also on the IBD 50 list, Celsius Holdings rose nearly 8% to an eight-month high. The relative strength line also hit an eight-month high.
Real estate investment trusts (REITs) outperformed on Friday. Agree Realty rose 1.8% and broke out of a cup-with-handle base, hitting the buy point of 74.77. The REIT leases to large retailers, including Costco Wholesale and AutoZone. The company has a bullish 93 Composite Rating and has shown consistent quarterly EPS growth of 11% to 17% in the last four quarters.
