Dow Reaches New Record High But Nasdaq Gives Back Ground

After ending the previous session firmly in positive territory, the major U.S. stock indexes are turning in a mixed performance during trading on Friday. While the Dow has jumped to a new record intraday high, the tech-heavy Nasdaq is giving back ground.

The Dow has seen further upside in recent trading and is currently up 422.23 points or 1.0 percent at 42,597.34. The S&P 500 is also up 4.95 points or 0.1 percent at 5,750.32, but the Nasdaq is down 50.88 points or 0.3 percent at 18,139.41.

The mixed performance on Wall Street comes following the release of closely watched readings on U.S. consumer price inflation in the month of August.

The Commerce Department said its personal consumption expenditures (PCE) price index inched up by 0.1 percent in August after rising by 0.2 percent in July. The uptick matched expectations.

The report also said the annual rate of growth by the PCE price index slowed to 2.2 percent in August from 2.5 percent in July. Economists had expected the pace of growth to slow to 2.3 percent.

Excluding food and energy prices, the core PCE price index also edged up by 0.1 percent in August after increasing by 0.2 percent in July. Core prices were expected to rise by another 0.2 percent.

Meanwhile, the Commerce Department said the annual rate of growth by the core PCE price index accelerated to 2.7 percent in August from 2.6 percent in July, in line with estimates.

“The August PCE report supports the Fed’s decision to go big on September 18, although the core year-over-year at 2.7% suggests that another round of 50 basis points needs to come under careful scrutiny unless the labor market suggests weakness,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

She added, “Although the Fed cannot declare complete victory on inflation, today’s report – with 2.2% on the year-over- year headline – underscores that overall inflation continues to move decisively in the right direction.”

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department’s report on personal income and spending.

Sector News

Oil service stocks are showing a significant rebound after falling sharply over the two previous sessions, resulting in a 2.6 percent surge by the Philadelphia Oil Service Index.

The rally by oil service stocks comes amid a modest increase by the price of crude oil, with crude for November delivery rising $0.16 to $67.83 a barrel.

Considerable strength is also visible among telecom stocks, as reflected by the 2.2 percent jump by the NYSE Arca North American Telecom Index. The index has reached its best intraday level in over two years.

Housing, steel and transportation stocks are also seeing notable strength on the day, while gold stocks have moved sharply lower along with the price of the precious metal.

Semiconductor stocks have also come under pressure over the course of the session, contributing to the dip by the Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged by 2.3 percent, while Hong Kong’s Hang Seng Index spiked by 3.6 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has jumped by 1.3 percent, the French CAC 40 Index is up by 0.7 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

In the bond market, treasuries are seeing modest strength following the inflation data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.1 basis points at 3.768 percent.

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