U.S. Stocks Turn In Mixed Performance But Post Strong Weekly Gains

Following the rally seen during Thursday’s session, stocks turned in a relatively lackluster performance during trading on Friday. The major averages bounced back and forth across the unchanged line before eventually ending the day mixed.

While the tech-heavy Nasdaq climbed 81.13 points or 0.4 percent to 20,026.77, the S&P 500 edged down 0.44 points or less than a tenth of a percent to 6,114.64 and the narrower Dow fell 165.35 points or 0.4 percent to 44,546.08.

Despite the mixed performance on the day, stocks posted strong gains for the week. The Nasdaq surged by 2.6 percent, the S&P 500 jumped by 1.5 percent and the Dow advanced by 0.6 percent.

The choppy trading on Wall Street came as traders expressed some uncertainty about the near-term outlook for the markets following Thursday’s rally, which saw the S&P 500 jump near its record highs despite data showing a bigger than expected increase by producer prices.

Traders were also digesting a mixed batch of U.S. economic data, including a Commerce Department report showing retail sales slumped by much more than expected in January.

The report said retail sales slid by 0.9 percent in January after climbing by an upwardly revised 0.7 percent in December.

Economists had expected retail sales to edge down by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

However, economists noted the sharp decline was largely due to extreme wintery conditions and the California wildfires.

A separate report from the Federal Reserve showed industrial production rose by more than expected in January, although the increase was largely due to a weather-related surge by utilities output.

The Fed said industrial production climbed by 0.5 percent in January after jumping by an upwardly revised 1.0 percent in December.

Economists had expected industrial production to rise by 0.3 percent compared to the 0.9 percent advance originally reported for the previous month.

“Retail sales will likely recover in coming months as Californians pick up the pieces and as winter weather affects the Midwest and East Coast less,” said Bill Adams, Chief Economist for Comerica Bank.

“Similarly, the industrial production report was choppy in January with obvious weather effects boosting utilities demand and weighing on mining and manufacturing,” he added. “These short-term fluctuations will fade quickly.”

Sector News

While most of the major sectors showed only modest moves on the day, computer hardware stocks extended Thursday’s rally, driving the NYSE Arca Computer Hardware Index up by 2.9 percent to a record closing high.

Significant strength was also visible among airline stocks, as reflected by the 2.3 percent surge by the NYSE Arca Airline Index.

On the other hand, gold stocks moved sharply lower along with the price of the precious metal, resulting in a 4.2 percent nosedive by the NYSE Arca Gold Bugs Index.

Pharmaceutical stocks also showed a notable move to the downside, dragging the NYSE Arca Pharmaceutical Index down by 1.7 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday. Hong Kong’s Hang Seng Index spiked by 3.7 percent and China’s Shanghai Composite Index rose by 0.4 percent, although Japan’s Nikkei 225 Index bucked the uptrend and slid by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index crept up by 0.2 percent, the U.K.’s FTSE 100 Index and the German DAX Index both fell by 0.4 percent.

In the bond market, treasuries extended the strong upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.3 basis points to 4.472 percent.

Looking Ahead

Following the Presidents’ Day holiday on Monday, the U.S. economic calendar is somewhat quiet next week, although traders are still likely to keep an eye on some housing and regional manufacturing data along with the minutes of the latest Fed meeting.

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