U.S. Stocks Rally But Still Close Notably Lower For The Week

Stocks showed a strong move to the upside during trading on Friday, extending the rebound seen in the previous session. The major averages all climbed firmly into positive territory, with the tech-heavy Nasdaq showing a particularly strong advance.

The major averages ended the session near their best levels of the day. The Dow jumped 360.68 points or 1.1 percent to 34,382.13, the Nasdaq soared 304.99 points or 2.3 percent to 13,429.98 and the S&P 500 surged up 61.35 points or 1.5 percent at 4,173.85.

Despite the rally on the day, the major averages moved notably lower for the week. The Nasdaq tumbled by 2.3 percent, while the S&P 500 and the Dow slumped by 1.4 percent and 1.1 percent, respectively.

The strength on Wall Street came as traders continued to pick up stocks at somewhat reduced levels following the sell-off seen earlier in the week.

Before the rebound on Thursday, the major averages ended Wednesday’s trading at their lowest levels in over a month.

A report from the Commerce Department showing retail sales were virtually unchanged in April after soaring by an upwardly revised 10.7 percent in March may also have eased recent concerns about the Federal Reserve tightening monetary policy.

Economists had expected retail sales to jump by 1.0 percent compared to the 9.8 percent spike originally reported for the previous month.

“Retail sales cooled in April, with a flat reading, as the sugar rush from generous fiscal transfers, rapid vaccinations and warmer weather faded,” said Gregory Daco, Chief U.S. Economist at Oxford Economics.

He added, “But don’t be fooled, stronger consumer spending activity lies ahead as US households have the means and the motivation to spend freely.”

A separate report from the Federal Reserve showed industrial production in the U.S. increased by less than expected in the month of April.

The report said industrial production climbed by 0.7 percent in April after soaring by an upwardly revised 2.4 percent in March.

Economists had expected industrial production to surge up by 1.0 percent compared to the 1.4 percent jump originally reported for the previous month.

Meanwhile, University of Michigan released a report showing consumer sentiment in the U.S. has unexpectedly decreased in the month of May.

The report showed the consumer sentiment index dropped to 82.8 in May from 88.3 in April. The decrease surprised economists, who had expected the index to rise to 90.4.

Sector News

Computer hardware stocks showed a substantial move to the upside on the day, driving the NYSE Arca Computer Hardware Index up by 4.2 percent.

Significant strength was also visible among airline stocks, as reflected by the 4.2 percent spike by the NYSE Arca Airline Index.

Energy stocks also saw considerable strength amid a rebound by the price of crude oil. After plunging $2.26 to $63.82 a barrel on Thursday, crude for June delivery jumped $1.55 to $65.37 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 3.9 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index surged up by 3.6 percent and 3.4 percent, respectively.

Semiconductor, gold, and brokerage stocks also saw notable strength on the day, reflecting broad based buying interest on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index spiked by 2.3 percent, while China’s Shanghai Composite Index jumped by 1.8 percent.

The major European markets also showed strong moves to the upside on the day. While the U.K.’s FTSE 100 Index surged up by 1.2 percent, the German DAX Index and the French CAC 40 Index shot up by 1.4 percent and 1.5 percent, respectively.

In the bond market, treasuries extended the rebound seen over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points to 1.635 percent.

Looking Ahead

Next week’s trading may be impacted by reaction to reports on homebuilder confidence, housing starts and existing home sales, while traders are also likely to keep an eye on the minutes of the latest Fed meeting.