U.S. Stocks Close Little Changed After Seeing Early Strength

After moving mostly higher early in the session, stocks gave back ground over the course of the trading session on Friday. The major averages pulled back off their best levels of the day before closing near the unchanged line.

The major averages finished the day with a mixed performance. While the S&P 500 dipped 7.26 points or 0.2 percent to 3,906.71, the Dow crept up 0.98 points or less than a tenth of a percent to 31,494.32 and the Nasdaq inched up 9.10 points or 0.1 percent to 13,874.46.

For the holiday-shortened week, the Dow crept up by 0.1 percent, while the S&P 500 slid by 0.7 percent and the Nasdaq slumped by 1.6 percent.

Continued optimism about more fiscal stimulus contributed to the early strength on Wall Street, as new Treasury Secretary Janet Yellen urged lawmakers to approve President Joe Biden’s $1.9 trillion relief package.

Yellen suggested during an interview with CNBC on Thursday that the Biden administration’s proposal could help the U.S. get back to full employment within a year.

The former Federal Reserve Chair also dismissed Republican complaints about the size of the proposed bill, arguing, “The price of doing too little is much higher than the price of doing something big.”

The comments from Yellen came after House Speaker Nancy Pelosi, D-Calif., said House Democrats aim to pass their version of the $1.9 trillion relief bill before the end of the month.

Democrats have been hoping to pass a new stimulus bill with Republican support but may be forced to use the process known as reconciliation to approve a relief package without GOP votes.

Traders have generally remained optimistic about more stimulus under Biden and the Democrat-controlled Congress, helping propel stocks to new record highs.

However, buying interest waned over the course of the session amid a jump in treasury yields, with the yield on the benchmark ten-year note reading its highest closing level in almost a year.

The recent increase in treasury yields has raised concerns about the outlook for interest rates amid worries about the prospects of higher inflation.

In U.S. economic news, the National Association of Realtors released a report showing another unexpected increase in U.S. existing home sales in the month of January.

NAR said existing home sales rose by 0.6 percent to an annual rate of 6.69 million in January after climbing by 0.9 percent to a revised rate of 6.65 million in December. Compared to the same month a year ago, existing home sales in January were up by 23.7 percent.

The continued growth came as surprise to economists, who had expected existing home sales to tumble by 2.2 percent to a rate of 6.61 million from the 6.76 million originally reported for the previous month.

Sector News

Despite the lackluster close by the broader markets, airline stocks showed a substantial move to the upside on the day. The NYSE Arca Airline Index soared by 3.7 percent to its best closing level in almost a year.

Considerable strength was also visible among steel stocks, as reflected by the 2.7 percent spike by the NYSE Arca Steel Index.

Semiconductor stocks also saw significant strength on the day, driving the Philadelphia Semiconductor Index up by 2.4 percent.

Applied Materials (AMAT) helped lead the sector higher after the semiconductor equipment maker reported better than expected fiscal first quarter results.

Banking, housing and oil service stocks also showed strong moves to the upside, while notable weakness emerged among utilities, pharmaceutical and retail stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index slid by 0.7 percent, while China’s Shanghai Composite Index climbed by 0.6 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index and the German DAX Index both advanced by 0.8 percent.

In the bond market, treasuries came under pressure after turning higher over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price climbed 5.8 basis points to 1.345 percent.

Looking Ahead

Next week’s trading may be impacted by reaction to reports on consumer confidence, new home sales, durable goods orders and personal income and spending as well as Congressional testimony by Federal Reserve Chair Jerome Powell.

On the earnings front, Home Depot (HD), Macy’s (M), Office Depot (ODP), Moderna (MRNA), Dell (DELL), HP Inc. (HPQ), and Salesforce.com (CRM) are among the companies due to report their quarterly results next week.