Economic Optimism Leads To Continued Strength On Wall Street

(RTTNews) - Following the mixed performance seen in the previous session, stocks moved mostly higher the course of the trading day on Friday. With the upward move, the Nasdaq and the S&P 500 reached new record closing highs, and the Dow ended the day at its best closing level in over six months.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Dow rose 161.60 points or 0.6 percent to 28,653.87, the Nasdaq climbed 70.30 points or 0.6 percent to 11,695.63 and the S&P 500 advanced 23.46 points or 0.7 percent at 3,508.01.

For the week, the Dow jumped by 2.6 percent, while the Nasdaq and the S&P 500 soared by 3.4 percent and 3.3 percent, respectively.

The markets continued to benefit from optimism about the economic recovery following the coronavirus crisis, which has helped lift the major averages well off their March lows.

The Nasdaq and the S&P 500 have more than offset the sell-off seen in late February and early March, soaring to new record highs.

The Dow has underperformed its counterparts but is also closing in on the record high set in February and has turned positive for 2020.

Traders also continued to digest Federal Reserve Chair Jerome Powell's announcement of the central bank's adoption of "average inflation targeting."

Powell's comments on Thursday were seen as an indication the Fed will leave interest rates at near-zero levels for the foreseeable future even if there is an acceleration in the pace of inflation.

Adding to the positive sentiment, the Commerce Department released a report showing an unexpected increase in personal income in July.

The Commerce Department said personal income rose by 0.4 percent in July after slumping by 1.0 percent in June. The rebound surprised economists, who had expected income to dip by another 0.2 percent.

The report also showed a continued surge in personal spending, which jumped by 1.9 percent in July after spiking by 6.2 percent in June. Economists had expected spending to increase by 1.5 percent.

The University of Michigan also released a report showing consumer sentiment in the U.S. improved by more than initially estimated in the month of August.

The report said the consumer sentiment index for August was upwardly revised to 74.1 from the preliminary reading of 72.8. The index is now well above the July reading of 72.5.

The upward revision came as a surprise to economists, who had expected the consumer sentiment index to be unrevised at 72.8.

Sector News

Gold stocks moved sharply higher over the course of the session, rebounding from the steep drop seen in the previous session. After tumbling by 2.3 percent on Thursday, the NYSE Arca Gold Bugs Index soared by 4.1 percent.

The rebound by gold stocks came amid a substantial bounceback by the price of the precious metal, with gold for December delivery spiking $42.30 to $1,974.90 an ounce.

Significant strength was also visible among airline stocks, as reflected by the 3.3 percent jump by the NYSE Arca Airline Index. The index ended the session at its best closing level in well over two months.

Computer hardware stocks also saw considerable strength on the day, driving the NYSE Arca Computer Hardware Index up by 3.1 percent.

Dell Technologies (DELL) and HP Inc. (HPQ) posted standout gains after reporting better than expected quarterly results.

Steel, energy and semiconductor stocks also showed notable moves to the upside, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while China's Shanghai Composite Index jumped by 1.6 percent.

Meanwhile, major European markets all moved to the downside on the day. While the French CAC 40 Index dipped by 0.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index fell by 0.5 percent and 0.6 percent, respectively.

In the bond market, treasuries showed a modest rebound following the significant downturn seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down 1.7 basis points to 0.729 percent.

Looking Ahead

The Labor Department's monthly jobs report is likely to be in focus next week along with reports on manufacturing and service sector activity, factory orders, and the U.S. trade deficit.