U.S. stocks ended modestly higher Friday as Wall Street closed out its best week of the year on bets that the Federal Reserve is engineering a soft landing for the world's biggest economy heading into the autumn months and beyond.
The S&P 500 closed 9.6 points, or 0.17% higher, taking its five-day advance to around 4%, while the Nasdaq added 33 points, or 0.18%, to boost its weekly gain to just over 5.5%.
The Dow, meanwhile, had its best week since December, rising 96 points to close at 40,658.71 points, the highest since July 31.
WHAT A CRAZY, RESILIENT WEEK!!!$QQQ Closed UP +5.5%$SPY Closed UP +4%$IWM Closed UP +3%$DJI Closed UP +3%
— Wall St Engine (@wallstengine) August 16, 2024
Interestingly, The S&P 500 and Nasdaq 100 both had ZERO red days this week.
Here’s the final weekly heatmap of the S&P 500 👇 pic.twitter.com/Ai5YbetOaK
Updated at 12:26 PM EDT
Gaining confidence
Stocks are trending higher following a stronger-than-expected reading for consumer sentiment from the University of Michigan's August survey, which was taken during the worst of the global market turmoil in the early part of the month.
"Falling stock prices might explain why the current conditions index dropped its lowest level since December 2022, but spending decisions are more closely correlated with the expectations index, which rose to a four-month high," said Ian Shepherdson of Pantheon Macroeconomics.
The S&P 500 was last marked 9 points, or 0.17% higher heading into the final hours of trading, while the Nasdaq gained 45 points, or 0.26% and the Dow rose 72 points.
August @UMich Consumer Sentiment Index up to 67.8 vs. 66.9 est. & 66.4 prior … expectations up to 72.1 vs. 68.5 est. & 68.8 prior pic.twitter.com/AFQUzulcjk
— Liz Ann Sonders (@LizAnnSonders) August 16, 2024
Updated at 10:50 AM EDT
Microsoft, macro spend
Microsoft (MSFT) shares edged lower in early trading following a price target update from BMO Capital Markets focused on the tech giant's massive capital spending plans.
Street forecasts suggest the group will devote around $150 billion in capex over the next two calendar years, most of it focused on data center developments, in order to capture the expected surge in demand for AI-related technologies.
Microsoft shares were marked 0.75% lower in premarket trading to indicate an opening bell price of $417.86 each, a move that would trim the stock's 2024 gain to around 13%.
Related: Analyst revisits Microsoft stock price target amid AI spending ramp
Updated at 9:38 AM EDT
Soft open
The S&P 500 was marked 13 points lower, or 0.24%, in the opening minutes of trading, with the Nasdaq down 57 points, or 0.32%.
The Dow was marked 44 points lower, but holding north of 40,500 points, while the Russell 2000 slipped 2 points, or 0.1%
S&P 500 Opening Bell Heatmap (Aug. 16, 2024)$SPY -0.27% 🟥$QQQ -0.46% 🟥$DJI -0.13% 🟥$IWM -0.20% 🟥 pic.twitter.com/matRSfWFed
— Wall St Engine (@wallstengine) August 16, 2024
Updated at 9:18 AM EDT
Shine on you crazy diamond
Gold prices hit a fresh all-time high in early Friday trading, rising more than 1.5% on the session to change hands at $2,486.12 per ounce.
Bullion prices have risen more than 20% so far this year, against a modest 1.4% advance for the U.S. dollar index, as investor look for hard-asset hedges against stubborn inflation and currency debasement from record spending and debt levels.
#GOLD, NEW ALL TIME HIGH! pic.twitter.com/SCNcn4Zod6
— jeroen blokland (@jsblokland) August 16, 2024
Stock Market Today
Stocks ended firmly higher across the board last night, with the S&P 500 rising more than 1.6% to close at the highest level since July 23, following a stronger-than-expected retail sales report and data showing another pullback in week jobless claims.
The benchmark has gained around 3.7% so far this week, its best advance since November, while megacap tech stock rebounds have lifted the Nasdaq more than 5%.
Following on from a muted July inflation reading, which showed headline price pressures falling below the 3% mark for the first time in three years, investors are now growing increasingly confident that the Fed will be able to tame inflation pressures without inducing a near-term recession — a soft landing for the economy.
"The risk-on rally on Thursday following retail sales and CPI data confirms the Goldilocks narrative," JP Morgan strategists wrote. "The S&P 500 has now recovered above the August 2 (payroll data release) level and is just 2.2% below its all-time high."
"The bullish narrative remains intact. With the market now seeing about a 30% chance of a 50 basis point cut at the September Fed meeting and its focus on growth, a 25 basis point or 50 basis point cut wouldn’t pose a risk to the bullish scenario in equities," the bank said. "The start of rate cuts should be a welcome sign for the market."
TheStreet/Shutterstock
The Atlanta Fed's GDPNow forecasting tool, which was updated yesterday, indicates a current quarter growth rate of 2.4%, while bets on a September Fed rate cut of 25 basis points are holding at 70.5%, according to the CME Group's FedWatch.
Benchmark 10-year Treasury note yields were last marked at 3.884% heading into the start of the New York trading session, with 2-year notes modestly higher at 4.060%.
Related: Recession forecasts crushed as economy defies doomsayers
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.16% lower at 102.81, on track for its third weekly decline and its longest losing streak in five months.
Heading into the start of the trading day on Wall Street, the S&P 500, which has an August gain of 0.38%, is priced for an opening bell dip of around 3 points.
The Dow Jones Industrial Average, meanwhile, is priced for a 3 point gain while the Nasdaq is called 8 points higher.
More Wall Street Analysts:
- Analysts reboot Amazon stock price targets after earnings
- Analyst reboots Rivian stock price target on updated plans
- Analysts reboot Arm Holdings stock price target following earnings
In Europe, the regional Stoxx 600 benchmark rose 0.46% in early Frankfurt trading and is on pace for its best week since May. Britain's FTSE 100 slipped 0.42% in London, snapping a five-day winning streak but also on track for its best week since early spring.
Overnight in Asia, Japan's Nikkei 225 surged 3.64% in a follow-on rally from last night's firm close on Wall Street, while the regionwide MSCI ex-Japan index was marked 1.79% higher into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
