Stocks Finish Friday’s Session in Negative Territory
Last Updated 4:15 PM EST
Stock indices finished Friday’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 decreased 0.43%, 0.93%, and 1.77%, respectively.
The communications sector was the session’s laggard, as it declined by 3.45%. Conversely, the utilities sector was the session’s leader, with a gain of 1.4%. In addition, WTI crude oil remained below $100 per barrel. At around $94.60 per barrel, it is near the session low of $94.26.
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 1.59% in the second quarter. This is worse than last week’s estimate of -1.52% and is likely due to this week’s worse-than-expected economic data, which includes jobless claims and existing home sales, just to name a few.
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 -21 basis points. An inverted yield curve is regarded by many investors as a recession indicator.
Gas Prices Continue to Decline as Oil Prices Fall
Last Updated 3:00PM EST
Stocks are negative heading into the final 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 down 0.7%, 1.2%, and 2%, respectively.
WTI crude oil is currently hovering around the mid-$94 per barrel range, as it trades not too far away from its session low of $94.26 per barrel. The price has pulled back considerably from this week’s high of $104.44 per barrel.
Consumers will be happy to see that the commodity’s recent pullback has led to lower gas prices across the country. The national average for regular gas was last $4.413 per gallon, down from yesterday’s reading of $4.44. 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 $5.787 per gallon. On the other hand, Texas is the state with the lowest gas price, at $3.922 per gallon.
It’s likely that this downward trend will continue going forward as the Federal Reserve looks to raise interest rates to fight inflation. However, higher rates will destroy demand throughout the whole economy. As a result, lower gas prices might have to come at the cost of a recession.
Manufacturing PMI Comes in Slightly Higher than Expected
Last Updated 12:00 PM EST
Equity markets are in the red halfway into the trading session. As of 12:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.1%, 0.6%, and 1.5%, respectively. The communications sector is the laggard so far, as it is down 3.3%. Conversely, the utilities sector is the session’s leader, with a gain of 1.3%.
On Friday, Markit released its preliminary report for the U.S. Manufacturing Purchasing Managers Index, which measures the month-over-month change in manufacturing activity. A number over 50 represents an expansion, whereas anything below 50 represents a contraction. The report came in at 52.3, slightly better than the expected 52.
It’s worth noting that this indicator has been downtrending ever since its peak in August 2021, when it hit a high of 63.4. If this trend continues, it might not take long before the manufacturing sector sees a contraction in activity.
Indeed, the Federal Reserve is trying to destroy demand in order to cool down inflation. Although it is attempting a soft landing, it’s more likely that it will tighten too far. As a result, the manufacturing sector will likely be a casualty.
Stocks are Mixed to Start Friday’s Trading Session
Last Updated 10:00AM EST
Stock indices are mixed 30 minutes into today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average is up 0.01%, while the S&P 500 and the Nasdaq 100 are down 0.3% and 0.7%, respectively.
The communications sector (XLC) is the laggard so far, as it is down over 2%. Conversely, the utilities sector (XLU) is the session’s leader, with a gain of 1.3%.
WTI crude oil remains below $100 per barrel as U.S. stockpiles of gasoline are higher. This is due to demand that is lower than pre-pandemic levels, which is the result of high prices at the pump. Currently, the price is hovering around $96 per barrel, down roughly 0.5% from yesterday’s close.
Meanwhile, bond yields are lower, as the U.S. 10-Year Treasury yield is now hovering around 2.76%. This represents a decrease of more than 11 basis points from the previous close.
Similar movements can be seen with the Two-Year yield, which is now at 2.96%. However, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -20 basis points.
Pre-Market
U.S. equity futures were mixed on Friday morning as investors await a new batch of major corporate earnings after a disappointing day for social media stocks.
Futures on the Dow Jones Industrial Average (DJIA) gained 0.17%, while those on the S&P 500 (SPX) moved 0.16% lower, as of 8.13 a.m. EST, Friday. Meanwhile, the Nasdaq 100 (NDX) futures slightly advanced by 0.32%.
After the closing bell on Thursday, social media company Snap (SNAP) spooked investors with lower-than-expected results and a concerning outlook, sending the shares of the stock plummeting more than 28% in the after-hours.
Needless to say, this tribulation sent other social media and technology stocks on a downhill trek as fears of a slowdown in advertising sales were sparked, snapping investors out of the fresh confidence in tech that they had gathered in the past few days.
Investors are awaiting earnings results from American Express (AXP), Verizon (VZ), and Twitter (TWTR) before the market opens on Friday.
On Thursday, the tech-heavy Nasdaq closed its third positive day with 1.44% gains. The S&P 500 and the Dow also gained 0.99% and 0.51%, respectively.
On the forex front, the euro fell 0.9% against the dollar after the 50 basis-point interest rate hike announced by the European Central Bank.
