Stocks Finish Friday’s Session in Positive Territory
Last Updated 4:15 PM EST
Stock indices finished Friday’s trading session mixed. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 increased by 2.15%, 1.92%, and 1.83%, respectively.
The utilities sector was the session’s laggard, as it increased by only 0.17%. Conversely, the financial sector led the market the whole day, with a gain of 3.45%. In addition, WTI crude oil remained below $100 per barrel, as it rallied by over 1% to the mid-$97 per barrel range. This is well off the weekly low of $90.58 per barrel.
Furthermore, the Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real-time. Currently, it estimates that the economy will contract by about -1.52% in the second quarter. This is worse than last week’s estimate of -1.24% and is likely due to this week’s worse-than-expected inflation report.
As a result, it is pointing to a second straight quarter of economic decline, which many define as a recession. Indeed the bond market remains inverted, as the spread between the 10-Year and Two-Year U.S. Treasury yields sits at -20.2 basis points. An inverted yield curve is regarded by many investors as a recession indicator.
Average Gas Prices Continue to Trend Down
Last Updated 3:00PM EST
Stocks are positive heading into the last hour of today’s trading session. As of 3:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 1.9%, 1.7%, and 1.6%, respectively.
The utilities sector is the laggard so far, as it is up only 0.03%. Conversely, the financials sector remains the session’s leader with a gain of 3.7%. In addition, WTI crude oil is currently hovering around $97.80 per barrel, as it remains well off the session low of $94.59 per barrel.
The commodity’s recent pullback has led to lower gas prices across the country. Undoubtedly, consumers welcome the drop as inflation has been cutting into their spending power. The national average for regular gas was last $4.577 per gallon, down from yesterday’s reading of $4.605. This is significantly lower than the all-time high of $5.016 per gallon on June 14.
The highest price can be found in California, where prices are substantially higher than the national average, at $5.953 per gallon. On the other hand, South Carolina is the state with the lowest gas price, at $4.086 per gallon.
There’s no doubt that consumers hope this downward trend continues. However, it is likely to come at the cost of a recession since the Federal Reserve will probably be forced to act more aggressively after this week’s inflation report.
Retail Sales Growth Comes in Better than Expected
Last Updated 12:10PM EST
Equity markets are in the green halfway into today’s trading session. As of 12:10 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 1.8%, 1.5%, and 1.2%, respectively.
On Friday, the Census Bureau released its month-over-month U.S. Retail Sales report, which measures the change in the total value of retail sales. In June, retail sales increased 1%, above the expected 0.8%.
However, this was primarily because consumers were paying higher prices as a result of accelerating inflation. Nevertheless, consumers remain in good shape as many are receiving wage increases and household finances remain strong.
In addition, Core Retail Sales, which excludes automobiles, also increased 1% month-over-month, which is above the 0.6% that was forecast. Unlike the previous month, gasoline prices had a lower impact on spending increases. Indeed, when excluding gasoline, core retail spending grew by 0.7% in June versus -0.1% in May.
This highlights how inflation is now broadening out to many different areas of the economy and is not just caused by food and energy anymore. This further feeds the narrative that a possible recession may be on the way as the Federal Reserve will likely have to be more aggressive.
Stocks are Green to Start Friday’s Trading Session
Last Updated 10:00AM EST
Stocks are positive 30 minutes into Friday’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 1.1%, 0.9%, and 0.8%, respectively. The utilities sector (XLU) is the laggard so far, as it is down 0.2%. Conversely, the financial sector (XLF) is the session’s leader, with a gain of more than 2%.
Financial stocks are getting a boost thanks to today’s earnings reports from Citigroup (C) and Wells Fargo (WFC). Although both companies saw profits decline on a year-over-year basis, earnings still came in higher than expected, which was enough to make their share prices pop.
In addition, WTI crude oil’s downward momentum takes a pause as it sees some green in today’s session. Currently, its price is hovering around $97 per barrel, which equates to an increase of 0.6% from the previous close.
Meanwhile, the U.S. 10-Year Treasury yield is lower, as it is hovering around 2.96%. This represents a decrease of over 0.5 basis points from the previous close.
Opposite movements can be seen with the Two-Year yield, which is now at 3.16%. This means that the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -20 basis points.
U.S. stock futures gained momentum in the early hours of Friday as investors hoped for good news after the disastrous results from two major banks.
Futures on the Dow Jones Industrial Average (DJIA) gained 0.32%, while those on the S&P 500 (SPX) moved 0.26% higher, as of 6.28 a.m. EST, Friday. Meanwhile, the Nasdaq 100 (NDX) futures advanced by 0.22%.
On Thursday, JPMorgan (JPM) and Morgan Stanley (MS) kickstarted the earnings season in the banking industry with dismal earnings and outlook, which did not sit well with investors who also have to worry about the hot inflation and rising interest rates. Sentiments regarding the upcoming earnings of Wells Fargo (WFC) and Citigroup (C) on Friday are also negative, as a result.
During a very sensitive period where any earnings miss may be catastrophic to stock prices, JPMorgan suspended its buyback program while Morgan Stanley missed investment banking revenue expectations.
At the end of Thursday’s regular trading session, the Dow and the S&P 500 closed 0.46% and 0.3% lower, respectively, while the Nasdaq100 gained 0.34%.
A report by Wall Street Journal revealed that activist investor Elliott Management bought more than 9% stake in Pinterest (PINS). Following the report, shares of the social media company soared 16% in the after-hour trading session, Thursday.
Meanwhile, the Commerce Department is expected to report the U.S. retail spending report for June, before the market opens on Friday. Moreover, a preliminary reading of the University of Michigan’s consumer-sentiment survey for July is also due out later on Friday.