Dow And S&P 500 Climb To New Record Closing Highs - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading session on Friday, extending the upward trend seen over the past several sessions. With the gains on the day, the Dow and the S&P 500 reached new record closing highs.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Dow rose 84.65 points or 0.4 percent to 21,637.74, the Nasdaq advanced 38.03 points or 0.6 percent to 6,312.47 and the S&P 500 climbed 11.44 points or 0.5 percent to 2,459.27.

For the week, the Nasdaq surged up by 2.6 percent, while the Dow and the S&P 500 jumped by 1 percent and 1.4 percent, respectively.

The strength on Wall Street came following the release of several key economic reports, with the data suggesting that the Federal Reserve will not be in any hurry to raise interest rates.

Before the start of trading, the Commerce Department released a report showing retail sales unexpectedly decreased for the second consecutive month in June.

The Commerce Department said retail sales fell by 0.2 percent in June after edging down by a revised 0.1 percent in May. The continued drop in sales surprised economists, who had expected sales to inch up by 0.1 percent.

Excluding auto sales, retail sales still dipped by 0.2 percent in June following the 0.3 decline seen in May. Ex-auto sales were expected to rise by 0.2 percent.

A separate report released by the Labor Department showed consumer prices came in unchanged in the month of June.

The Labor Department said its consumer price index was flat in June after edging down by 0.1 percent in May. Economists had expected consumer prices to inch up by 0.1 percent.

Excluding food and energy prices, core consumer prices crept up by 0.1 percent for the third consecutive month. Core prices had been expected to rise by 0.2 percent.

The report said consumer prices in June were up by 1.6 percent compared to the same month a year ago, a deceleration from the 1.9 percent year-over-year growth in May.

The annual rate of growth in core consumer prices came in at 1.7 percent in June, unchanged from the previous month.

"With its dual mandate, the Fed needs to take into account the decline in the unemployment rate this year as well as the drop back in core inflation," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

"For that reason, we still expect the Fed to continue raising interest rates in the second half of this year," he added. "Nevertheless, the odds of a September rate hike are fading."

Meanwhile, the Federal Reserve released a report showing industrial production increased by slightly more than anticipated in the month of June.

The Fed said industrial production climbed by 0.4 percent in June after inching up by a revised 0.1 percent in May. Economists had expected production to rise by 0.3 percent.

Weakness among financial stocks limited the upside for the markets, with Wells Fargo (WFC), Citigroup (C), and JPMorgan Chase (JPM) all closing lower after reporting their second quarter results.

Sector News

Electronic storage stocks showed a strong move to the upside over the course of the session, driving the NYSE Arca Disk Drive Index up by 2.1 percent. The index climbed to its best closing level in over a month.

Within the storage sector, NetApp (NTAP) posted a standout gain, surging up by 5.5 percent to its best closing level in over three years.

Significant strength was also visible among gold stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Gold Bugs Index. The strength in the sector came as gold for August delivery jumped $10.20 to $1,227.50 an ounce.

Oil service stocks also saw considerable strength amid an increase by the price of crude oil. With crude for August delivery climbing $0.46 to $46.54 a barrel, the Philadelphia Oil Service Index advanced by 1.3 percent.

Telecom, semiconductor, and tobacco stocks also saw notable strength on the day, while some weakness was visible among banking stocks.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region saw modest strength during trading on Friday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index rose by 0.2 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the German DAX Index edged down by 0.1 percent and the French CAC 40 Index closed just below the unchanged line.

In the bond market, treasuries moved back to the upside following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 2.319 percent.

Looking Ahead

Earnings news is likely to move into the spotlight next week, with Bank of America (BAC), Goldman Sachs (GS), UnitedHealth (UNH), IBM (IBM), American Express (AXP), Microsoft (MSFT), Visa (V), and General Electric (GE) among the companies due to report their quarterly results.

Reports on import and export prices, homebuilder confidence, housing starts, and New York and Philadelphia-area manufacturing activity may also attract attention.